23 Feb 2023

Government will continue to observe the trends and act appropriately in order to cushion citizens amidst the rising prices of basic food items.

Answering a parliamentary question on Wednesday, Minister Peggy Serame acknowledged the significant increase in basic food items prices, which she attributed to the increase in commodity prices globally and domestically as a result of the COVID-19 pandemic which had impacted supplies and prices of food items for most people, both local and internationally.

“For this reason, the Ministry of Finance is proposing to amend the VAT Act to revise the list of zero rated foodstuffs,” Minister Serame said.

The minister said in efforts to address the challenge, government came up with an initiative to cushion the impact of rising food prices for households.

“It was on this endeavour that government, in August last year, decreased the rate of VAT from 14 to 12 per cent for a period of six months,” she said.

She added that the period had since been extended to the end of the financial year on March 31 this year.

She also said cooking oil and Liquefied Petroleum Gas (LPG) were zero rated for the same period of six moths and VAT was not charged for such items.

“However, the six months period for cooking oil and LPG lapsed on February 2 this year and therefore the items are now charged VAT at 14 per cent,” she said.

Also, she said when the rate of VAT was increased or decreased the ministry expected VAT registered retailers or businesses to comply with the requirements under the law.

“This means that they are required to charge the correct tax, and to report all their sales to the Commissioner General and accordingly pay the tax they collect,” she said.

Moreover, she said as part of compliance and enforcement measures, Botswana Revenue Service (BURS) guided tax auditors to conduct tax audits to check whether VAT was correctly charged and the correct tax was remitted.

MP for Selebi Phikwe East, Mr Kgoberego Nkawana had lamented increased tax which he said had made food to become expensive and unaffordable to many people.

As such, he wanted to know if there were any measures that had been put in place to make sure that retailers did not take advantage of tax increment and overcharge consumers. ENDS