Katse Dam, the main dam constructed
under the Lesotho Highlands Water Project.
Kieran Holmes at the base of the dam during the construction period.
Key Lessons Learned
- The importance of identifying and bringing into charge all taxpayers, particularly the large international consortia that were operating on the Lesotho Highlands Water Project
- Broadening the tax base brings in significant additional revenues while at the same time allowing for a substantial reduction in tax rates
- The taxation of non-residents is an essential part of tax-base broadening
- Forms design and the clear presentation of material to taxpayers is an integral and often overlooked aspect of effective tax reform
I managed two projects for DFID in the period 1991 to 1997.
A key aspect of the Lesotho tax reform was bringing the large international construction consortia operating on the Lesotho Highlands Water Project into the charge to taxation, something that was widely resisted at the time.
The success of the tax reform was demonstrated by a sustained increase in income tax receipts of 2,000% during the six-year period, even at a time when tax rates were cut from 53% to 35% in the same period.