8 March 2018

Swaziland: Electricity VAT Rise Shelved for Now

Members of the House of Assembly in Swaziland have voted against putting a 15 percent Value Added Tax on electricity prices.

It happened during a debate on the national budget on Wednesday (7 March 2018). In his budget speech on 1 March 2018 Finance Minister Martin Dlamini said government wanted to review the VAT Act to allow the tax to be added to tariffs. The order to raise VAT generally by 1 percent to 15 percent goes ahead.

The VAT increases were not well received in Swaziland where seven in ten of the estimated 1.1 million population have incomes less than the equivalent of US$2 per day.

The Times of Swaziland reported Acting Finance Committee Chairperson Marwick Khumalo in a report said the VAT on electricity had been deferred pending a cost-benefit analysis to be undertaken by the Ministry of Finance.

In his budget speech Dlamini had said the VAT increase was needed to keep the kingdom in line with neighbouring South Africa which announced its own increase in February 2018.

However, 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.

On Monday, members of parliament in Swaziland sent the national budget back to the Ministry of Finance be reviewed because they said it did not meet the needs of poor people and rural communities.


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