By: Mpho Shelile

MASERU

Taxes play a pivotal role in the economic and social development of any country. They fund essential services such as healthcare, education, infrastructure, and social security. Yet, for many, taxation remains a complex and often misunderstood subject. To shed light on common misconceptions and highlight the incentives available to businesses, particularly those in the informal sector, Informative Newspaper spoke with the Revenue Services Lesotho (RSL) and street vendors.

For many small business owners, taxes often feel like an added burden. However, understanding how taxes contribute to public services and how tax incentives can alleviate financial stress could change that perception. Street vendors and small business owners, the backbone of the economy, have the potential to grow and thrive while contributing to a stronger, more equitable society.

What do street vendors think about taxes?
Motlatsi, a fruit and vegetable street vendor, says, “I know taxes are something I am required to pay, but it’s tough. I work long hours in challenging conditions, and sometimes I don’t even make enough to cover my basic needs.”

Morapeli, a fashion retailer, feels that taxes add to his already heavy workload. “We don’t have the benefits that formal employees do, like healthcare or paid leave. We pay for everything out of pocket, including supplies and transportation costs. When taxes are discussed, it feels like we weren’t considered in the design of tax policies, especially those of us importing products.”

Boithatelo, another street vendor, acknowledges the role of taxes in supporting public services but also expresses frustration. “I understand taxes are meant to help the community, but it feels unfair when we’re struggling to make a living and still have to give a percentage to the government. There should be more recognition of the challenges we face, and perhaps lower tax rates or more support for vendors like us who are just trying to survive.”

What are some of the common misconceptions about paying taxes?
According to RSL, many people mistakenly believe that only formally established businesses should pay taxes. They also argue that individuals earning from side hustles, who are already taxed on their primary income, should be exempt. Moreover, RSL emphasises that the tax burden should largely fall on foreign businesses operating in the country, and other income sources like residential property earnings should not be taxed.

Why is paying taxes important?
RSL underscores that government funding through taxes is essential for providing key services such as healthcare, education, social security, infrastructure, and more. The progressive tax system ensures that lower-income earners pay less than higher earners, which helps reduce income inequality and promotes social equity.

What are the benefits of taxes, and where does the money go?
RSL explains that the taxes collected fund a wide range of public services. From healthcare and education to social security and infrastructure development, taxes ensure these services are accessible to all. The government also uses taxes to provide law enforcement, social grants, and recreational services.

Are there any tax incentives for small businesses?
Yes, RSL offers several incentives for small businesses. These incentives include a progressive tax system, tax credits, deductions for training expenses, and lower tax rates for manufacturing businesses. For youth entrepreneurs, RSL’s Bacha Entrepreneurship Project provides additional support. These incentives are available to businesses that meet specific criteria, but proactive engagement is necessary to take full advantage of them.

How is RSL raising awareness about taxes?
RSL has a comprehensive taxpayer education program that includes TV and radio programs, social media livestreams, print guides, and YouTube videos. The organisation also hosts tax sessions through initiatives like the LDF Boot Camp and Bacha Entrepreneurship Project. Special activities like Spelling Bee competitions further aim to educate and engage the community.

For many street vendors, taxes can feel like a significant burden, but with the right knowledge of how taxes fuel public services and the available tax incentives, the perspective can shift. Small businesses are vital to any economy, and with access to the right resources and information, they can grow and contribute to a more equitable society.

By staying informed and embracing the importance of taxes, small businesses can build a solid foundation for success and contribute to the future of our communities and economy. Taxes are not merely a cost; they are an investment in the well-being of the nation.