The governor of the Bank of Botswana (BoB) Cornelius Dekop says that the tax hikes announced by the government in last week's budget speech won't push inflation higher.
Dekop was responding to a media inquiry about concern that the 1.5% spikes in personal income tax and corporate tax may drive up inflation.
"Taxes at this level wont necessarily change the consumption patterns of high income earners and corporates," said Dekop. "They will find a way to pay those taxes without changing demand."
In his inaugural budget speech last week, Minister of Finance Ndaba Gaolathe announce the tax increases, which he described as an effort to boost government revenue.
"Even with this adjustment, Botswana’s tax rates will remain among the lowest in the region. Currently, Botswana’s tax-to-GDP ratio stands at approximately 13%, below the African average of 16 percent and the SACU average of 20%," Gaolathe said when justifying the hike.