Namibia Revenue Agency Bill – Finance officials to reapply for jobs

Namibia flagOver 1 380 finance ministry officials will be required to reapply for their jobs when the proposed state-owned Namibia Revenue Agency is formed.

Finance minister Calle Schlettwein tabled the Namibia Revenue Agency Bill 2017 to pave the way for the creation of the independent agency which will assess and collect taxes.

The agency will not only extract the largest part of the finance ministry’s workforce, but a proposed law tabled last week suggests that the new parastatal should be allowed to attract experts by paying more than what other civil servants currently earn.

When he tabled the proposed bill in the National Assembly last week, Schlettwein said 730 officials from the Inland Revenue department and 650 from the directorate of customs will have to reapply for their jobs when the new agency opens next year.

According to Schlettwein, the two departments make up 79% of the total staff at the finance ministry.

Schlettwein told The Namibian yesterday that the finance ministry has a total workforce of 1 740, but the two departments have up to 1 380 workers.

“To further avoid compromising on the skills needed for the agency, there will be no automatic transfer of existing staff of the departments of Inland Revenue and Customs and Excise to the new institution,” the minister stated.

However, finance officials will be offered the first opportunity to apply and compete for jobs offered at the new agency before the platform is opened up to the public, he said.

“As such, arrangements will be made to ensure that the selection process is transparent and adheres to best practices,” Schlettwein added.

According to the minister, officials at the finance ministry who fail to get jobs at the new tax agency will be offered positions elsewhere in government, as stipulated in the Public Service Act.

He said some officials at the agency will also be highly paid in order to attract the best talent.

“The agency will be exempted from the public service rules and public enterprises remuneration guidelines,” he noted.

The 2017/18 budget documents indicate that the finance ministry will spend N$28 million on salaries and other benefits. Schlettwein said the new parastatal will start working next year at a date yet to be announced, adding that there is a need to manage the transition process well to avoid making costly mistakes.

He said for now, a finance ministry and revenue agency task team will finalise the transitional aspects for the establishment of the agency.

“This entails further consultations on the operational modalities, the determination of the recruitment process, and proposals for the draft internal policies of the new institution in preparation for the recruitment of the board and senior management of the agency,” Schlettwein stated.

The minister said one of the functions of setting up a highly-paying tax body is to catch companies and individuals who are taking advantage of loopholes to avoid paying taxes.

“We are a resource-based economy, which comes with the potential for illicit financial flows, transfer pricing, profit shifting and other base-eroding tax planning activities,” he said.

Illicit financial flows involve money illegally earned, transferred or used which crosses national borders. Culprits are usually multinational companies and criminals.

The minister said tackling illicit financial flows will require specialised skills, which could not be optimised in the public service due to a lack of skills.

Tackling illicit financial flows will give President Hage Geingob’s administration plaudits for tackling corporate and financial cheating.

The real impact of illicit financial flows on Namibia is currently not known, as the government continues to rely on international statistics when commenting on the subject.

For instance, the United States-based think tank, Global Financial Integrity, said in its 2012 report that Namibia lost around N$5,6 billion per year to illegal activities between 2001 to 2010.

The Namibia Revenue Agency will be run by a seven-member board on a three-year term. The board members will be appointed by the minister from experts selected from state entities, such as the permanent secretary from the finance ministry, the commissioner, and five members who will be appointed based on areas of expertise such as taxation, law, auditing and human resources.

A commissioner will be appointed as the chief executive for five years. The chief executive can only serve for a maximum two terms (10 years), but his/her second-term appointment should be based on “excellence” in performance, and at the discretion of the finance minister. Source: The Namibia, 2017-06-27. Author: Shinovene Immanuel

Advertisements

AGOA – a Poisoned Chalice?

AGOA States-GAO

“Is the Africa Growth and Opportunity Act (AGOA) always a poisoned chalice from the United States of America?”, asks an editorial in The East African. The Kenya newspaper suggests it appeared to be so after the US allowed a petition that could see Tanzania, Uganda and Rwanda lose their unlimited opening to its market.

This follows the US Trade Representative assenting last week to an appeal by Secondary Materials and Recycled Textiles Association, a used clothes lobby, for a review of the three countries’ duty-free, quota-free access to the country for their resolve to ban importation of used clothes, the The East African continues.

The US just happens to be the biggest source of used clothes sold in the world. Some of the clothes are recycled in countries like Canada and Thailand before being shipped to markets mostly in the developing world.

In East Africa, up to $125 million is spent on used clothes annually, a fifth of them imported directly from the US and the bulk from trans-shippers including Canada, India, the UAE, Pakistan, Honduras and Mexico.

The East Africa imports account for 22 percent of used clothes sold in Africa. Suspending the three countries from the 2000 trade affirmation would leave them short of $230 million in foreign exchange that they earn from exports to the US.

That would worsen the trade balance, which is already $80 million in favour of the US. In trade disputes, numbers do not tell the whole story. Agoa now appears to have been caught up in the nationalism sweeping across the developed world and Trumponomics.

US lobbies have been pushing for tough conditions to be imposed since it was enacted, including the third country rule of origin which would require that apparel exports be made from local fabric.

The rule, targeted at curbing China’s indirect benefits from Agoa through fabric sales, comes up for a legislative review in 2025, making it prudent for African countries to prepare for the worst. Whether that comes through a ban or phasing out of secondhand clothing (the wording that saved Kenya from being listed for a review) is immaterial.

What is imperative is that African countries have to be resolute in promoting domestic industries. In textiles and leather, for instance, that effort should include on-farm incentives for increasing cotton, hides and skins output, concessions for investments in value-adding plants like ginneries and tanneries and market outlets for local textile and shoe companies.

The world over, domestic markets provide the initial motivation for production before investors venture farther afield. Import bans come in handy when faced with such low costs of production in other countries that heavy taxation still leaves those products cheaper than those of competitors in the receiving countries.

The US has also been opposed to heavy taxation of used clothes, which buyers say are of better quality and more durable. For Kenya to be kept out of the review, it had to agree to reduce taxes on used apparel.

These factors have left Agoa beneficiaries in a no-win situation: Damned if you ban, damned if you do not. With their backs to the wall, beneficiaries like Tanzania, Uganda and Rwanda have to think long term in choosing their industrial policies and calling the US bluff.

Beneficiaries must speak with one voice to effectively guard against trade conditions that over time hamper domestic industrial growth. Source: The East African, Picture: US GAO