MBABANE – The government of Eswatini (Swaziland) has opted to tax its way out of the country’s ongoing economic doldrums, and the transportation industry is bracing for more expenses. “Eswatini is facing an unprecedented economic crisis,” the minister for finance Neal Rijkenberg told the Swazi parliament last week as he presented government’s 2019/20 budget. “Preliminary estimates suggest a contraction of 0.4% in our GDP for 2018, and the economic outlook remains subdued. Foreign Direct Investment has been on average negative for a number of years. Arrears have accumulated and we continue to draw down on our reserves. The economy has stagnated and we are failing to attract investment as the gap between the rich and poor continues to grow,” the finance minister told MPs. Complaining that “for too long now, this economic reality has not been addressed”, Rijkenberg proposed new means to boost government revenues that will add to the cost of doing business in Eswatini. One is a new tax on petrol, at R1.20 per litre. A 15% VAT on electricity purchases is also on the cards. In recent years, labour unions have included VAT on electricity as one of their points of protest in periodic national strikes held to influence government policies. Up to now, government has yielded, and has not enacted its previous VAT on electricity proposals. “This year things are different. Foreign
investment has flatlined, and government is looking internally to increase its revenue stream,” a source with the Swaziland Federation of Employers/ Chamber of Commerce (SFE/CC) told FTW. The SFE/ CC is also not happy about a slew of licence fee increases announced by the finance minister, including an increase in the cost to register a business. Taxes on vehicles are going up, which will impact the road freight industry, and immigration fees from work permits to tourist fees are going up. Trading licence fees are being increased, as are taxes on popular South African wine and alcohol products. While government is relying more on donors to pay its bills – the government of Taiwan is rehabilitating the main national hospital
in Mbabane – the bulk of government revenue continues to come from the Southern Africa Customs Union (Sacu). However, Rijkenberg reported, “volatile SACU receipts have made government’s fiscal position untenable, and in the medium term Sacu receipts are expected to decline.” MPs showed no interest in or ideas to deal with the finance minister’s lamentation when he declared: “We are in trouble because our private sector is too small and its growth is too slow. We are in trouble because we have not been balancing our books. We are in trouble because we have not developed a strong policy framework to address the needs of our people. We are in trouble because we have failed to adequately address corruption.”
CAPTION: Taxes on vehicles are going up, which will impact the road freight industry.
