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MARTIN COULD ANNOUNCE ELECTRICITY VAT CHARGE

01/03/2018 01:16:00 BY TIMES REPORTER

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MBABANE – Businesses and consumers alike should brace themselves for an increase in the cost of electricity.

The Times of Swaziland Business Desk was made to understand that there are moves by government to effect a Value Added Tax (VAT) on electricity. The bad news are highly likely to be delivered today at about 2:00pm by Minister of Finance Martin Dlamini when delivering the National Budget Speech.

Information reaching this publication is that government officials have been making concerted efforts to have VAT levied on electricity, come April 2018. Our sources further revealed that both Swaziland Electricity Company (SEC) and Swaziland Energy Regulatory Authority (SERA) were rigorously consulted about the on the cards levying of VAT on electricity. “SERA and SEC are aware about this intended move and it is likely to be announced by the minister when delivering the budget speech. It is something highly likely to be implemented,” said the source.

Another senior source at the Ministry of Finance said the decision to charge VAT on electricity was reached after it was discovered that it would play a major role in boosting domestic revenue collection. “Government coffers are almost dry and charging VAT on electricity could boost the domestic revenue. We are all aware that our economy is moribund hence the decision,” said the source.

Should the minister announce that VAT will now be charged on electricity, consumers should brace themselves for a 29 per cent electricity hike. In April 2019, SEC will increase electricity by 15 per cent as per the approval by SERA in 2017.
SERA CEO Vusi Mkhumane refused to comment on the matter He referred all questions to the ministry of Natural Resources and Energy and to the Ministry of Finance. Vusi Dlamini – SRA Director Communications also said he could not comment because it was a policy issue which was decided by the ministry of Finance.

Regarding this issue, Finance ministry’s Principal Secretary Bheki Bhembe said he could not divulge what the minister would say in the budget speech. Swaziland Consumer Forum Chairman Mandla Ntshakala said charging VAT would be damaging to consumers and it would make electricity highly unaffordable. Ntshakala said the consumer forum was totally against the effecting of VAT on basic commodities like electricity. “The poor will be made worse off should they charge VAT on electricity. Currently, the price of electricity is already on the high side and a further hike will result in the increase of inflation which will in turn lead to an overall increase in the prices for basic commodities.” Ntshakala said.
Government, through the draft amendments in the Value Added Tax (VAT) of 2011, intends to remove electricity from the list of exempt supply services.

The imminent charge of VAT on electricity might come at a time when the SRA is in between a hard surface and a rock following that South Africa increased VAT to 15 per cent.
Other than that this will affect Swazi importers in that they will be buying at a higher price and be forced to sell at a lower price, the VAT increase by the South African government will negatively affect the SRA. This would be more so because the Sekulula VAT Easy will no longer be applicable.