Minister of Finance & Economic Development Peggy Serame has called on Local Authorities to get serious and raise revenue internally and do away with dependence on Central Government for resources.
Local Authorities’s administration and development budgets are catered for by the national budget under the Ministry of Local Government & Rural Development, with only a smaller, insignificant fraction coming from their own internal revenue generation means, but that is about to change drastically, Minister Serame has warned.
Speaking at a Local Authorities version of the Budget Pitso Yersterday said Government coffers had taken a serious beating, noting that revenue projections, have been revised downwards, while expenditures are expected to rise, especially in the health sector, in relation to procurement of COVID-19 vaccines and related supplies.
She noted that as a result, an overall budget deficit of 4.0 percent of GDP is anticipated for the 2022/2023 financial year.
“Ladies and gentlemen, in view of this, we have to continue to adjust and reprioritise our spending plans. The budget must be geared towards resetting the economy and must remain guided by the five priorities of the reset agenda, which are: Saving Botswana’s Population from COVID-19; Digitization; Value Chain Development; Public Sector reform and Re-alignment; and Mind-set Change. We must also ensure that scarce resources are channelled only to high return programmes and projects” she said.
Minister Serame told local authorities that there is need for a sustainable resource mobilisation and financing plan.
Historically, the budget has been primarily funded by financial resources generated from external sources, including mineral and SACU revenues. Going forward, the focus will be on domestic resource mobilization as a key source of Government revenue.
“This will mean taking measures to broaden the tax base, ensuring efficiency in our tax collection mechanisms and seeking other avenues to raise revenues, such as in fees and charges” she said.
Furthermore the Minister said efficiency of Government spending will be prioritised, especially by speeding up the necessary public sector reforms and improving the roll-out of public e-services.
“This is critical, as we do not have sufficient financial buffers in the Government Investment Account, which declined during 2020 significantly. Additional resources, if required, will need to be raised through domestic and foreign borrowing, while ensuring that we remain within the statutory debt limit of 40% of GDP”
In terms of Local Authorities budget Minister Serame said local government entities will have to go big on their own revenue collection agendas to ensure they stay afloat because there is no more chunk of budget from the Central government.
“I wish to urge you, the leadership of Local Authorities as you are in charge of collection of property and business tax collection, to increase your efforts in the capturing and administration of revenue collection and monitoring of such taxes”
“Revenue collection should therefore be one of priorities for this coming financial year. I further implore you to levy appropriate tariffs and fees for the services you provide. For example, leasing of government boreholes or licenses that are issued and collect revenue from customary court fines. Other sources of local tax revenue where improvements should be made include rates collection, service levies and user charges.”
Serame indicater that there is a lot of room for improvement on revenue collection and efficiency in spending.
” Some Local Authorities have debts that are far in excess of their annual revenue support grant from Government.As an example, in March 2020, one Local Authority uncollected rates amounted to nearly eight years of rates income. This must change” Minister Serame said.