The Scope of Government Revenue Mobilization in Lesotho

SACU REVENUE revenue has been the major source of government revenue averaging about 26.0 per cent of GDP between 2000 and 2015. However, it has been characterized by a lot of volatility though tilted more on a downward trajectory. The future trend in SACU revenue is expected to be downwards in line with global trends on customs revenue as a result of trade liberalization. Other sources of revenue, particularly tax revenue have also been sluggish. These have raised the need for alternative sources of revenue for the Government of Lesotho (GoL). Thus this paper identifies possible additional domestic revenue mobilization avenues for Lesotho.

This is achieved by comparing Lesotho’s tax rates and rates on non-tax revenue sources with those of other SACU member countries and other selected African countries. The areas identified include increasing tax rates on petrol and diesel, mobile telecommunication services. New taxes could also be introduced on alcohol and tobacco, sugar sweetened beverages and plastic bags. Contracts with diamond mining companies could be renegotiated to raise more revenue from the sector. Implementation of revenue raising measures that were proposed to GoL before also needs to be expedited. Other existing taxes such as the gaming levy, which have not been reviewed in a long time, should also be considered. While out of line with the scope of this paper, improvements in government spending efficiency, containing and streamlining public spending and implementation of policies and strategies for enhancing private sector growth could maximize the benefits of the proposed tax revisions.