Gaolathe Calls for Bold Tax Reforms at Inaugural Tax Pitso
Gaolathe Calls for Bold Tax Reforms at Inaugural Tax Pitso
Vice President and Minister of Finance Ndaba N. Gaolathe has called for decisive and inclusive tax reforms, warning that Botswana can no longer rely on mineral revenues to sustain its development agenda.
Speaking at the inaugural Tax Pitso held in Gaborone under the theme “Shaping Botswana’s Future Tax System: Dialogue for Fair and Sustainable Tax Reform,” Gaolathe said the country stands at a critical turning point that demands urgent transformation of its fiscal framework.
Gaolathe stated that while Botswana’s diamond-led economic model has historically supported infrastructure development and improved livelihoods, it is now under increasing strain due to declining mineral revenues and global economic uncertainty. He noted that the country’s tax-to-GDP ratio, currently estimated at around 13.4 percent, remains significantly below regional averages, highlighting the need to strengthen domestic revenue mobilisation.
According to Gaolathe, the government is undertaking a comprehensive overhaul of tax legislation aimed at modernising and simplifying the system. He explained that key reforms include consolidating administrative provisions from the Income Tax Act and Value Added Tax Act into a unified Tax Administration Act to improve efficiency, reduce duplication, and ease compliance for taxpayers.
He further stated that the existing Income Tax Act, last comprehensively reviewed in 1995, has become outdated and overly complex due to numerous amendments over the years. The ongoing review, he said, seeks to create a more coherent and user-friendly framework while aligning it with current economic realities.
On Value Added Tax, Gaolathe indicated that the proposed reforms will expand the tax base to include digital products and remote services, ensuring that the system keeps pace with the evolving digital economy. He added that these measures are intended to enhance fairness and ensure that emerging sectors contribute appropriately to national development.
Gaolathe also revealed proposed adjustments to tax rates, including a 27.5 percent rate for higher income earners and 25 percent for corporate entities, noting that the changes are guided by the principle of equity and ability to pay. In addition, he highlighted the introduction of a simplified tax regime for small businesses as part of efforts to support entrepreneurship and encourage formalisation.
He emphasised that trust remains central to the success of any tax system, stating that compliance is closely linked to public confidence in how government manages resources. Gaolathe noted that government is strengthening public financial management systems, enhancing transparency, and addressing inefficiencies to ensure that tax revenues are used effectively.
Meanwhile, Acting Commissioner General of the Botswana Unified Revenue Service (BURS), Phodiso Valashia, underscored the urgency of reform, pointing to a revenue shortfall of over P1.5 billion recorded during the current financial year. He said improved enforcement and compliance efforts have already recovered more than P1.3 billion, demonstrating the potential of strengthened systems.
Valashia further revealed that Botswana’s VAT gap is estimated at around 40 percent, indicating significant leakages in revenue collection. He said BURS is implementing a reform programme anchored on digitalisation, system integration, improved governance, and enhanced compliance measures to address these challenges.
He added that the revenue service has been tasked with collecting approximately P65.17 billion in the 2026/27 financial year, which is expected to finance the bulk of government expenditure.
Both Gaolathe and Valashia emphasised that tax reform is not solely a government responsibility but requires collective commitment from businesses, citizens, and all stakeholders. They called for a cultural shift towards full compliance, stressing that national development ultimately depends on the willingness of citizens to contribute.
The two-day Tax Pitso serves as a platform for consultation and engagement, with stakeholders invited to interrogate proposed legislation and contribute to shaping a modern, fair, and sustainable tax system for Botswana.