DOMESTIC REVENUE HIGHEST IN 3 YEARS

MBABANE – Despite massive job losses due to the effect of COVID-19, the country’s domestic revenue purse is yet to considerably shrink.

This is revenue government generates from domestic resources mainly tax. In his mid-term budget statement last Wednesday, Minister of Finance Neal Rijkenberg reported that domestic revenue collection at 2021/22 half year was E5.7 million. Individual income tax in pay-as-you-earn (PAYE) was recorded at E1.85 billion against a budget of E3.89 billion. Company tax collection was E1.04 billion.

Taxes on goods and services, which is a major contributor of domestic revenue, stood at E2.46 billion at half year against a budget of E5.69 billion. Comparisons done by this publication show that the domestic revenue figure is better than that of the past two years. Domestic revenue collection at half year in 2020/21 amounted to E4.47 billion. This was below the E5.27 billion collected at the same time in 2019/20.

Reduction

This reduction came despite an overall increase in taxes on goods and services. However, income tax, taxes on property and non-tax revenue collection had decreased in that period. Asked to react on the domestic revenue figures, an analyst told this publication that the joy could be short-lived, as the unrest that started in late June this year led to more job losses, affecting PAYE. At least 5 000 people were feared to have lost their jobs after businesses were torched and vandalised. The importance of revenue from taxation cannot be overstated. It provides government with the funds needed to invest in development, relieve poverty and deliver public services; and the physical and social infrastructure required to enhance long-term growth.

Meanwhile, government had delivered more on capital projects in mid 2021/22 as compared to the same period last year.  Capital expenditure stood at E2.76 billion of the total budget of E6.37 billion, translating to an execution rate of 43 per cent. The execution rate for locally funded capital projects stood at 40 per cent during the same period last year. Experts say capital expenditure leads to productive asset creation, which in turn aids economic development, especially infrastructure. Capital asset creation leads to value creation and has a multiplier effect on the economy. It promotes job creation and raises purchasing power and labour productivity. In the year under review, public investment has been ring-fenced to spur economic growth and boost employment as part of the post COVID-19 economic recovery strategy.

Relating

Recurrent expenditure, on the other hand, had soared to E8.22 billion against E17.67 billion at mid 2021/22. This is expenditure relating to the day-to-day spending by government, including expenditure on wages for civil servants, spending on goods and services and transfers to government sub-vented entities. 
The amount government spends on the wage bill still does not make for riveting reading. In the current financial year, government will spend around 30 per cent of the total budget (E24.04 billion) in paying salaries for over 45 000 employees.

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