MBABANE – Swaziland’s flat economic growth of 1% in 2017 combined with out-ofcontrol government spending has created a cash crisis at the kingdom’s treasury.
In response, the 2018 budget presented last week by finance minister Martin Dlamini introduces new taxes and increases old taxes, hitting struggling businesses and the transport sector hard. One new revenue-raising measure is an entry fee that all Swazi-registered vehicles must now pay for entry to the country at border posts.
Previously exempt from a road fee, Swazi vehicles must now pay R30. Road freight operators complain that fee payment will require drivers to endure an additional queue at border posts, increasing transport times. Telling parliament that government spending had outpaced revenues, Dlamini said that expansion of the public work force had had a negative effect on economic growth and job creation.
“This has led to the large size of government, increased the wage bill significantly, and limited the space for social and infrastructure spending.”
However, an elaborate government-owned luxury hotel and conference centre under construction in Ezulwini is listed as a spending priority. The centre will be used for an African Union Heads of State conference in 2020, and will get R1.5 billion in funding this year. The fate of other infrastructure projects including roadwork not related to the hotel/ conference centre is uncertain.
The most controversial new revenue grab is Swaziland’s first tax on electricity. A 15% surcharge was announced in the budget, which on top of a 15% increase in the price of electricity scheduled for April 1 will effectively raise the commodity’s price by a third. Manufacturing, mining and commercial enterprises say they were caught unprepared for the energy tax which will significantly impact their operating costs.
Contacted by FTW, the Swaziland Chamber of Commerce/ Federation of Swaziland Employers said the organisation had not been consulted about the new tax regime. A Manzini business owner who chose not to give his name because his firm enjoys government contracts said: “There is no economic growth in Swaziland and once again government’s answer to financing its spending spree is taxes. Government knows this will harm the economy but there is an air of desperation about this.”
Last Thursday, MP Marwick Khumalo gathered enough support in parliament to temporarily remove the electricity tax from the budget to allow for consultation with stakeholders. Other tax hikes will remain, including a rise in VAT from 14% to 15% starting April 1.
