The Effects Of Fiscal Policy On The Livelihood Of Low Income Earning Household In Namibia, Windhoek

Abstract

The research paper was based on how fiscal policy affects the livelihood of the low income earning households in Windhoek informal settlements in Namibia. The study’s focus was on Value added Tax and Income tax. Fiscal policy is a very important economical tool for every economy as it can be used as a tool in a recession. However, government expenditure and taxation and its administration might have either a positive or negative influence on the low income earning households.

The target population for the research was be selected from Windhoek’s informal settlements. Due to many informal settlements in Windhoek, Cluster sampling was used, the population was divided into groups of elements with some groups/ locations randomly selected. Five informal settlements were selected namely: Havana, Okuryongava, Ombili, Agste laan and Okahandja Park.

The study looked at the perception of the low income earning household with regards to taxation, and government expenditure. It was observed in the study that income tax does not have an effect on the livelihoods of low income earning households as most do not reach the current threshold. However, Value Added Tax tends to increase the prices of consumables, especially food, irrespective of the Zero-rate. Since low income earning households have a higher propensity to spend, they can be affected more than the high income earning households.

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Since the study only looked at the impact of fiscal policy on the low income households. It’s recommended that further studies be done to analyse the impact of taxation (all taxes) and the impact on the low income households. Further studies can also be done analyzing only the government expenditure and impact it has on low income earning households.