Taxes are the lifeblood of any nation, funding essential services, such as education, healthcare and infrastructure. In Namibia, the Namibia Revenue Agency (NamRA) shoulders the responsibility of collecting taxes, administering customs and ensuring compliance. Despite its critical role, NamRA is often criticised, with some perceiving it as oppressive or burdensome. However, such views ignore the fundamental role of taxation in nation-building, as well as the consequences of inadequate tax collection.

This article highlights NamRA’s mandate, its importance in Namibia’s development, and the need for a more inclusive and reformed tax regime. 

Drawing lessons from other countries and history, it also emphasises why Namibians should support NamRA for a stronger, more self-sufficient nation.

NamRA’s role and mandate 

Established to replace the tax administration previously handled by the Ministry of Finance, NamRA operates as a semi-autonomous body to ensure efficiency in collecting taxes, facilitating trade, and promoting compliance. Its core mandates include tax collection: ensuring individuals and businesses pay their taxes; trade facilitation; streamlining customs to encourage legitimate trade; compliance enforcement: tackling tax evasion and fraud; and public awareness: educating citizens on the role of taxes in national development.

NamRA’s semi-autonomy allows it to function without the bureaucratic delays typical of government departments, enhancing its ability to broaden the tax base, modernise systems and improve accountability.

Why semi-autonomous tax entities are essential

Globally, independent tax authorities have proven effective in ensuring efficient tax collection.

The South African Revenue Service (SARS) modernised tax processes, improving compliance and funding public programmes, such as healthcare and social grants (Mabugu et al., 2013).

The United States (US)’ Internal Revenue Service (IRS) enables the US government to collect the revenue needed for federal programmes like Social Security and Defence (IRS, 2022).

Germany’s Finanzamt, known for its efficiency, supports a strong welfare state, including free healthcare and education (OECD, 2021).

China’s state tax administration: China has successfully funded massive infrastructure projects, and alleviated poverty through robust tax collection.

Japan and India balance enforcement and public education to sustain long-term economic growth.

These examples illustrate the value of independent revenue agencies in strengthening state capacity and funding essential services.

The social contract and tax compliance

The social contract, a concept developed by thinkers like Rousseau, argues that citizens give up certain freedoms, such as paying taxes, in exchange for protection, services and public order provided by the State. Taxes are the foundation of this agreement. 

They enable governments to build schools, hospitals and roads; fund pensions and social welfare programmes; and ensure law and order through police and judicial systems.

When citizens evade taxes, they weaken the social contract, resulting in poor public services and deteriorating trust in the government (Friedman, 2021).

When States fail to collect taxes

History provides stark lessons on the consequences of poor tax collection.

Zimbabwe’s collapse: Tax evasion and economic mismanagement led to hyperinflation, failing hospitals and crumbling infrastructure (Hawkins, 2009).

Greece’s debt crisis: Chronic tax evasion played a major role in Greece’s financial collapse, forcing austerity measures that hurt its citizens (OECD, 2017).

Failed African states: Somalia’s inability to collect taxes has resulted in reliance on foreign aid and chronic under-development. Namibia must heed these lessons. 

Failure to collect taxes could result in underfunded schools and healthcare facilities; delayed infrastructure projects; and increased unemployment and poverty.

Need for tax regime reforms

Namibia’s tax regime requires adjustments to ensure equitable and efficient revenue collection. One pressing issue is the export of raw materials, which limits the country’s ability to capture the full value of its natural resources.

For instance, Namibia banned the export of unprocessed critical minerals such as lithium and cobalt in 2023 to encourage local value-addition (Reuters, 2023). Additionally, the Export Levy Act of 2017 imposes levies on raw material exports to promote in-country processing. However, more can be done.

Review export levies: Regularly assess levies to incentivise local industries without discouraging investment.

Value-addition incentives: Provide tax breaks or subsidies for companies investing in manufacturing facilities, boosting job-creation and skills development.

Targeted tax compliance: Strengthen NamRA’s capacity to monitor high-income earners and businesses prone to evasion.

Public education campaigns: Increase awareness about how taxes fund essential services, and why compliance is critical.

Building trust and compliance

NamRA must address public misconceptions by demonstrating transparency and fairness. 

Success stories, such as South Africa’s funding of social grants through SARS, should be shared to inspire trust. Citizens, too, must see tax payment as a moral obligation and patriotic duty.

NamRA is a pillar of Namibia’s development, tasked with ensuring effective tax collection to fund public goods and services. Historical evidence shows that failure to collect taxes undermines governance, leading to economic instability and social collapse. Namibians must support NamRA by embracing tax compliance as part of their social contract. 

Additionally, reforming the tax regime, particularly regarding raw material exports, is crucial to unlocking Namibia’s economic potential. 

With collective effort, Namibia can strengthen its fiscal capacity and build a prosperous future for all its citizens.

*Lot Ndamanomhata is a graduate of public management, journalism and communication. This article reflects his views. He writes entirely in his capacity.