GOVT IMPOSES THREAT TO BANKING INDUSTRY

MBABANE – Introduction of a bank levy on revenue will not only increase the cost of banking on companies and individuals but poses a threat to the entire banking industry.

This assertion was made by Standard Bank Chief Executive (CE) Mvuselelo Fakudze during a meeting with the Editors Forum to introduce the institution’s executive management held at Royal Swazi Sun Hotel yesterday.

The CE explained that the introduction of a banking levy on revenue would have ripple effects that would not only increase the cost of banking for ordinary customers and businesses but would also prompt banks to re-consider their investments in the kingdom especially if banks would be expected not to pass on the levy to customers.

Fakudze pointed out that generally if a levy gets imposed, there would have to be a mechanism developed by those affected to include the cost to their pricing model. He mentioned that if the cost of lending becomes higher, most businesses and individuals would not be able to service their loans which would cause more problems not only for banks but the general populace as well.

“The levy on banking revenue will have negative impact on the country’s economy,” said Fakudze.
Further illuminating on the effects of the levy imposition, Fakudze mentioned that should legislators decide that banks should not charge the levy on their customers’ foreign banks might want to review whether they still want to continue operating in the kingdom.

The CE explained that in well developed economies the only similar levy charged was to help during challenging economic times not to finance fiscus. He recommended that increasing revenue ought not to be about increasing tax but rather to create robust activity within the economy to generate revenue.

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