ESWATINI’S HIGH FUEL TAXATION IN SACU

MBABANE – While government proposes an additional 30 cents fuel tax, the current taxation on fuel is joint highest alongside South Africa in the SACU region.

Eswatini is a member of the Southern African Customs Union (SACU) alongside Botswana, Lesotho, Namibia and regional heavyweights South Africa. The country has a fuel tax of E3.85 per litre, which goes straight into the government Consolidated Fund. Fuel oil levy is at 50 cents/l, which is for  cushioning of fuel price increases and it goes to the Strategic Oil Reserve Fund.  The Motor Vehicle Accident Fund levy is at 35 cents/litre, which is for the Sincephetelo Motor Vehicle Accidents Fund (SMVAF).

Include

Other levies include Eswatini National Petroleum Company levy, which is at 35 cents/l for the Eswatini National Petroleum Company.  From last year, private petroleum firms operating in Eswatini pay 35 cents of every litre of fuel sold in the country to the newly-formed government oil company, the ENPC. The customs and excise duty is at 4 cents/litre and it contributes to the SACU pool.

Comparisons done by this publication, places the country’s figures among the highest in the region. In South Africa, the general fuel levy also stands at E3.85 per litre. Namibia’s figures are second highest at E3.71. For Lesotho, the levy is on E1.70 while the lowest rate is for Botswana at E1.47. With the proposed 30 cents additional tax, this means the taxation will rise to over E4 per litre of petrol which currently E18.55. Minister of Finance Neal Rijkenberg, in his budget speech last month said the establishment of a Roads Agency Fund has been tabled in Parliament, as a sustainable and permanent solution to  the country’s roads crisis.

Objective

The objective of this Fund is to tender out all roads maintenance to the private sector. “We envisage it to be funded by the savings from shutting down government departments currently responsible for road maintenance, the road toll charges at the border crossings, additional funds from the fiscus and an additional 30 cents fuel tax that I intend to table with the Fuel Tax Bill,”said the minister.

Analysts say the introduction and increments of a fuel levy can discourage vehicle users from using their vehicles and can promote use of public transport or vehicle lift clubs. Furthermore, a fuel levy is said to be promoting use of more fuel-efficient technologies which are cost-saving and less polluting, while revenues are also collected. The link between fuel levy and economic growth can be explained from both the demand and supply sides .On the demand side, the consumer’s demand for fuel is elastic to changes in the fuel levy. The supply side is affected through the cost of production as fuel is used as an input factor.

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