Industry

Bloated civil service costs Govt N.dollars 85.2 billion in three years

Summary

As the government continues to grapple with how it can curtail its bloated wage bill, it spent N.dollars 85.2 billion to foot the salary bill of civil servants between 2017 and 2019.This figure comes from Auditor General (AG) Junias Kandjeke’s audit r…

As the government continues to grapple with how it can curtail its bloated wage bill, it spent N.dollars 85.2 billion to foot the salary bill of civil servants between 2017 and 2019.

This figure comes from Auditor General (AG) Junias Kandjeke’s audit report on the government’s expenditure and revenue for the 2018/19 financial year (FY).

The report, availed recently, reaffirms the situation Government finds itself, whereby around half of its annual budget goes into salaries.

This situation has been described as unsustainable by politicians and economic experts alike.

It is no secret that government is between a rock and a hard place and with its hands tied: it cannot retrench nor can it send those aged 55 onto early retirement which would require huge severance packages to attract early retirement.

Finance minister Ipumbu Shiimi recently conceded to this reality.

Broken down, personnel costs totalled N.dollars 29.3 billion during the 2018/19 FY. This figure represents 51 per cent of the total government expenditure of N.dollars 58 billion for the FY in question.

During 2017/18, government spent N.dollars 29.2 billion while in the preceding FY, N.dollars 26.7 billion was expended.

Government did generate revenue through many streams during the financial periods under review.

For instance, it pocketed N.dollars 1.1 billion from fuel levies between 2017 and March 2019.

The highest contributor to the State’s purse during the period under review was taxing on income and profits. Through this, government generated N.dollars 21.9 billion in 2018/19. During the preceding FY, N.dollars 21.9 billion was collected.

“The overall low growth in the economy and investment opportunities contributed to a decline in tax collection,” the report says.

One of the chief contributors to government’s coffers is income tax on individuals, through which it collected N.dollars 13.6 billion and N.dollars 13.2 in 2018/19 and 2017/18, in that order.

From liquor licences, government made N.dollars 3.7 billion during the 2017/18 FY.

There was a sharp increase in 2018/19, as government would make a cool N.dollars 11.3 billion from liquor licences.

“The surplus on revenue was due to awareness efforts and increased consumption of liquor which leads to the application of liquor licences.”

The controversial fishing quotas brought in N.dollars 412.7 million over the two financial years.

Meanwhile, fishing boats and factory licences generated N.dollars 340 653 over that period.

As far as value-added tax (VAT) is concerned, government collected N.dollars 23.3 billion.

“The reduction in the collection of VAT [during 2018/19] attributes to the local economy that continues to contract in growth and is posing a fiscal challenge to the wholesale and retail sectors which are major contributors of value-added tax to the government,” explains the report.

On the front of company taxes (diamond mining, other mining and non-mining companies), the State profited N.dollars 7.3 billion and N.dollars 7.8 billion in 2018/19 and 2017/18 respectively.

Source: Namibia Press Agency