FSE&CC: INCREASE VAT TO BOLSTER REVENUE

MBABANE – While consumers believe they are already tax burdened, there is a strong perception to the contrary by the private sector. 

  
The assertion is to the effect that a lot of Swazis are not part of the tax bracket and therefore costing the country millions in revenue has been brought to the fore by the business community through one of their umbrella bodies – Federation of Swaziland Employers and Chamber of Commerce (FSE&CC).

The federation’s President Andrew le Roux has recommended that consumption taxes, which are usually indirect such as Value Added Tax (VAT), should be increased if the kingdom seeks to generate more revenue by closing tax gaps.
The president said an increase in Value Added Tax (VAT) and other consumption taxes would greatly improve revenue generation to help government improve service provision.

“If as a country we are committed to expand the tax base, we need to hike consumption taxes, such as VAT and tax on fuel, so that whether you are a dagga farmer or hawker, you are brought into the tax net,” said le Roux. He said an increase on consumption taxes would also be highly beneficial for the kingdom because it remains cost effective to collect.   

In justification of the recommendation, le Roux said consumption taxes were a fair form of tax on the basis that it remains user pace based. He said this effectively means the consumer would be able to determine how they would pay tax by monitoring their expenditure.
VAT is levied on the consumption of goods and services in Swaziland, and is also levied on the importation of goods and services into the country. It was introduced on April 1, 2012 to replace Sales Tax. Like Sales Tax, it is an indirect tax and levied on most goods and services at the rate of 14 per cent. The legal basis is the VAT Act 2011 supplemented by VAT Regulations.

VAT is paid by a person who brings taxable goods or services into Swaziland (usually the importer) and any person who receives supplies of taxable goods or services in Swaziland. A person in this case includes any individual, partnership, company, trust, government and any public or local authority.

Swaziland Revenue Authority (SRA) Acting Director Communications Ricardo Kruger said even though they may have a comment on the issue of the recommended hike, they would prefer to let the ministry of Finance take the lead in discussions.
“This is a policy issue that should be led by the ministry (of finance). We can only make our comments known at a later stage,” Kruger briefly said.    

    
Business Day recently reported that South Africans are already bracing themselves for a VAT hike. It was projected that an increase of one percentage point increase in VAT rate could raise more than E22 billion in revenue for the republic.

An economist interviewed by the Business Desk on condition of anonymity said government’s decision not to hike VAT would only be in the short term. He said considering Swaziland’s reliance on the South African economy, which includes the local currency being pegged to the rand, the country would eventually follow suit by also hiking VAT.

“The VAT hike relief will only be a short while. Considering the fact that government has cash flow challenges, it will definitely consider hiking VAT

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