Namibia: VAT on milk to stay

The Namibian government has refused to remove value added tax (VAT) on the price of milk. The Namibian Dairy producers organization requested the Namibian directorate of local income in May 2006 to follow the example of South Africa and declare fresh milk as a basic need upon which no taxation is applicable.

Mnr. Calle Schlettwein, permanent Secretary of the Namibia Ministry of Finance said the decision not to discard VAT on milk is because of two reasons: “This industry is already receiving advantages because of Article 26 of the African Customs Union (SACU),” he said.

"Secondly, the ministry cannot decrease the country's tax basis. Namibia is a country that spend more than what it can collect through tax. We cannot afford to discard VAT on fresh milk."

The price of fresh milk is to climb by 50c in the beginning of April 2007 following increases in production costs to producers. The dairy industry has warned of a collapse of the industry and a dependence on foreign imports if prices are not increased to match rising production costs.