A TORRID time lies ahead for severely affected small to medium enterprises and poorly paid employees hard-hit by economic headwinds from the Covid-19 pandemic after the government shot down thoughts of tax breaks or tax holidays.
Minister of finance Ipumbu Shiimi reiterated this on Friday, while responding to questions from the media at the 17th Covid-19 briefing, adding that he is convinced enough remedies have been made to assist struggling workers and small businesses.
"You do not pay tax without taxable income, do you? If you are making losses, you can't pay tax because you have no taxable income. Those businesses making losses will not pay tax. We believe we have offered enough options to help those struggling businesses and the commercial banks have also offered them repayment holidays," Shiimi said.
Shiimi also reiterated that tax holidays are not an option for now but said the government is looking at incentivising those companies that owe the tax office.
"We have quite a significant number of those with outstanding tax payments. We can maybe give them breathing space so that it gives them a longer repayment period because they are also affected by Covid-19. We want to smoothen their repayment period," the minister added.
His sentiments come at the back of the Namibian Statistics Agency showing that most small to medium enterprises risk going under because of poor financial backing as a result of the ripple effects of the Covid-19 pandemic.
The Bank of Namibia's recently released monetary policy statement also indicates a very low uptake for loans offered by commercial banks despite record low interest rates.
According to Shiimi, efforts are centred on finding breathing space for the economy in ways that will stimulate growth for key sectors and not compromise government revenue streams.
Shiimi said the government has assisted companies through accelerating the processing of invoices and value-added-tax repayments, adding that N$3,8 billion has been paid out for both.
"That will go a long way in improving the cash flow of the business sector, including SMEs. We have also announced that we want to work with commercial banks and the Development Bank of Namibia (DBN) to assist SMEs. Banks have provided repayment holidays for businesses, including SMEs," he said.
The minister also added that through the DBN, the government has been able to secure funds from the market for supporting SMEs to the tune of N$500 million. The funds are for existing SMEs and new SMEs wanting to borrow funds from the bank.
"Together with commercial banks and the Bank of Namibia, we are looking at loan scheme support packages that we have introduced. There was not much uptake on the existing ones. We are busy re-looking at them. In a couple of weeks we will pronounce ourselves as to how to revamp and change it so that it can better suit the needs of SMEs," Shiimi added.
He also made reference to the employee and employer support programme by the government that is administered by the Social Security Commission, saying it is for people who lost employment or experienced salary reductions.
He added that so far 10 400 people have benefited. Shiimi noted that businesses were slow to take up the programme but by last Thursday, about N$4,5 million was paid up.
The government has also paid out N$567 million as the emergency income grant to 700 690 Namibians.
President Hage Geingob also backed his finance chief by calling for consolidation.
While acknowledging that it has been a bumpy ride financially and socially since the onset of Covid-19, Geingob preached a message of resilience and finding ways that would help steer the economy forward.
He eased the curfew that ran from 20h00 to 05h00 by two hours a day to now run from 22h00 to 05h00.
Geingob urged Namibians to continue abiding by the laid-down health protocols, adding that assessment so far has shown a 20% decrease in the Covid-19 infection rate.