EPZs bled govt coffers dry - Smit
The official opposition has welcomed changes to the Income Tax Act, saying it hopes Namibia has learnt from its experiences.
OGONE TLHAGE - Popular Democratic Movement (PDM) secretary for finance Nico Smit has blasted the existing legislation guiding export processing zones (EPZs), saying this led to a situation where government coffers were being bled dry.
Under current legislation, enterprises operating in EPZs are exempted from paying corporate income tax as well as customs duties and value-added tax on machinery, equipment and raw materials imported into Namibia for manufacturing purposes. This comes as finance minister Calle Schlettwein is pushing for amendments to the Income Tax Act.
Sharing his disapproval of the current EPZ regime, Smit said in National Assembly earlier this week that the first signs of failure were noticeable in 1992 already, with the creation of the first zone to attract investment into Namibia.
“Who of the parliament members can recall the large iron gates put up in 1992 in the desert outside Walvis Bay on the airport road, and the loud fanfare with which this EPZ was opened? The only problem was that there was no legislation, and the large piece of land allocated to the sheik was randomly assigned by the Walvis Bay municipality, then newly under Swapo control, who wanted to make a political statement,” said Smit.
‘Convenient milk cow’
According to him, Swapo ruined the first EPZ.
“The first successful EPZ was ruined by Swapo by giving in to the demands of the labour unions. It was clear that our government saw the EPZ as nothing more than a convenient milk cow to be exploited for its own benefit,” he said.
After the exit of enterprises, government felt a need to change legislation guiding enterprises operating in EPZs, opening the door to abuse of the system, Smit argued.
“As the operational EPZ companies left the zone one after the other due to union intransigence, another attempt was made to change the status, locality and operations of companies in the EPZ regime by amending the legislation to grant EPZ status to several industrial areas. This is how we got Ramatex, but this is also how the door was opened for abuse,” Smit said.
“The irony is that Namibia’s business community and many members of the public have been aware of this for many years, but it has taken the government more than 10 years to realise that EPZs are bleeding its fiscus dry,” he added.
‘Painful experience’
According to Smit, it was legalised theft, allowed by government officials, many of whom received bribes.
Smit welcomed changes to the Income Tax Act, saying he hoped Namibia had learnt from its experiences.
“I fully support the Income Tax Amendment Bill, hoping that through this painful experience, the government has finally learnt that it, and thus the Namibian people, were robbed for so long by people who claimed to have the best interest of Namibia at heart.”
Under current legislation, enterprises operating in EPZs are exempted from paying corporate income tax as well as customs duties and value-added tax on machinery, equipment and raw materials imported into Namibia for manufacturing purposes. This comes as finance minister Calle Schlettwein is pushing for amendments to the Income Tax Act.
Sharing his disapproval of the current EPZ regime, Smit said in National Assembly earlier this week that the first signs of failure were noticeable in 1992 already, with the creation of the first zone to attract investment into Namibia.
“Who of the parliament members can recall the large iron gates put up in 1992 in the desert outside Walvis Bay on the airport road, and the loud fanfare with which this EPZ was opened? The only problem was that there was no legislation, and the large piece of land allocated to the sheik was randomly assigned by the Walvis Bay municipality, then newly under Swapo control, who wanted to make a political statement,” said Smit.
‘Convenient milk cow’
According to him, Swapo ruined the first EPZ.
“The first successful EPZ was ruined by Swapo by giving in to the demands of the labour unions. It was clear that our government saw the EPZ as nothing more than a convenient milk cow to be exploited for its own benefit,” he said.
After the exit of enterprises, government felt a need to change legislation guiding enterprises operating in EPZs, opening the door to abuse of the system, Smit argued.
“As the operational EPZ companies left the zone one after the other due to union intransigence, another attempt was made to change the status, locality and operations of companies in the EPZ regime by amending the legislation to grant EPZ status to several industrial areas. This is how we got Ramatex, but this is also how the door was opened for abuse,” Smit said.
“The irony is that Namibia’s business community and many members of the public have been aware of this for many years, but it has taken the government more than 10 years to realise that EPZs are bleeding its fiscus dry,” he added.
‘Painful experience’
According to Smit, it was legalised theft, allowed by government officials, many of whom received bribes.
Smit welcomed changes to the Income Tax Act, saying he hoped Namibia had learnt from its experiences.
“I fully support the Income Tax Amendment Bill, hoping that through this painful experience, the government has finally learnt that it, and thus the Namibian people, were robbed for so long by people who claimed to have the best interest of Namibia at heart.”
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