6 March 2018

Swaziland: Hostile Reaction to Vat Increase

The announcement by Swaziland Finance Minister Martin Dlamini that Value Added Tax is to rise by 1 percent to 15 percent to put it in line with neighbour and major trading partner South Africa has been criticised throughout the kingdom.

South Africa made the change last month (February 2018).

Dlamini said in his budget speech on Thursday (1 March 2018) he also wanted to find a legal way of putting VAT on electricity charges. Electricity tariffs are already set to rise by 15 percent on 1 April 2018.

The VAT increase will affect people especially the poorest, commentators in Swaziland said.

When the South African Treasury announced its increase in VAT it also announced measures to mitigate the impact of the VAT increase on poor households with above inflation increases in social grants, partial relief for inflation for the bottom three personal income tax brackets (for people who do not receive social grants), a marginal increase in the tax credits for medical aid contributions and maintaining the 19 zero-rated food items.

Swaziland's Finance Minister made no concessions. Dlamini also announced additional taxation on alcohol and tobacco products. There are also plans to increase the fuel tax rate by 20 cents from the current E3 and a review of user fees for mobile phones.

Trade Union Congress of Swaziland (TUCOSWA) Deputy Secretary General Muzi Mhlanga said, 'The cost of living as we speak is too high for the working class and such hikes are hard hitting and we are not happy with what was announced by the minister.'

Federation of Swaziland Business Community (FESBC) Chief Executive Officer Dudu Nhlengethwa was against the increase and said businesses had not been consulted.

The Times Sunday newspaper in Swaziland reported (4 March 2018) that the Swaziland Electricity Company (SEC) was against imposing VAT on its charges. The newspaper quoted SEC Marketing and Corporate Communications Manager Sifiso Dhlamini saying, 'Disposable income for the customer has not increased but is still the same, so there will be an erosion of their purchasing power if VAT will be added on electricity.'

Interviewed by the Swazi Observer newspaper Swaziland Revenue Authority (SRA) Commissioner General, Dumsani Masilela said the increase was rare and inevitable. The Observer reported, 'He said it was inevitable because Swaziland had in the past traditionally been aligned with South Africa where VAT is concerned due to structural issues which make it hard for Swaziland to act unilaterally.' He added that the SRA had made extensive consultations on the VAT issue.

The Editor of the Observer on Saturday Alec Lushaba, writing in his own newspaper, said the increase in VAT meant, 'that certain goods and services which are normally accessible to ordinary members of the society, in particular the poor, will no longer be available'. He added that social grants (pensions) for people aged 60 or over had not been increased in the budget.

Swazi Observer Group Managing Editor Mbongeni Mbingo, writing in the Sunday Observer, (4 March 2018) said the increase in VAT did not consider, 'what the implication and impact really is going to be for an economy that already is on its knees and obviously, with so much unemployment'.

He added, 'But, this electricity hike and the decision to impose VAT on it shows Cabinet's fragrant disregard for the situation on the ground.'

Sifiso Sibandze, writing in the Times Sunday, (4 March 2018) said, 'The long and short of it is, the budget was meant to further disadvantage the already disadvantaged - the poor. It is a budget that will make the poor poorer. Through the budget, government was legitimising his intention of pick-pocketing the poor.'


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