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BUSINESS ESWATINI WANTS FUEL LEVY SCRAPPED OFF

18/07/2022 06:00:00 Mhlengi Magongo

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MBABANE - The fuel levy has become an ever increasing and lucrative tax for the authorities to tap into.

It has been generally motivated as a ‘tax on the rich’, because vehicle owners are regarded as being on the wealthier side of the fence. Business Eswatini (BE) want the Parliament to scrap the existing levy of E3.85 per litre which currently persists. This was mentioned by Business Eswatini Chief Executive Officer (CEO) Nathi Dlamini in an interview with the business desk. The CEO said they were last week given the opportunity to appear before Senate yesterday to make presentations to members of the Parliament Finance Portfolio Committee on the proposed increase of the fuel levy as per the Fuel Tax Bill 2022. He said they were prompted by the fact that an increase in the price of fuel would have a domino effect on prices of all other goods and services; and recognizing the current economic climate of the country.

“We had to vigorously push back on the bill. However, we are pleased to report that Senate seemed to be one-minded with us, at least in terms of holding the increase in abeyance,” he said. Dlamini alluded that scrapping the existing levy would allow breathing room to motorists and public transport operators. He said they hope that this particular submission will be debated in the house in due course. Business savings and revenues are expected to decline due to the recent hike in fuel and other commodities. Cost of service delivery across business especially logistics and courier will increase relatively to meet the demands of fuel, thus affecting revenues. Small businesses that use vehicles as part of their daily operations, such as construction, transportation, maintenance and deliveries, would be hit the hardest.

These industries will be the first to administer extra charges to offset rising fuel prices and help maintain their profit levels. Some businesses may begin to limit their service and delivery areas, targeting smaller regions to help reduce their fuel costs. Companies and should expect a decline in their savings due to the increment in fuel and other household commodities. Economist last week said Thembinkosi Dube said the purchasing power in the money markets stood to be eroded by inflation due to the Russia-Ukraine war.He said they should consider having short-term saving accounts or money market funds which they could use to contribute affordable amounts. This, he said, would assist them in having access to money during difficult times and emergencies.

He said they should seek short-term liquidity which they could use to complement their retirement income such as when inflation drastically increases the cost of essential goods as this was bound to happen due to the constant hike in the price of fuel. Dube said: “If it were not for the political instability, property would be the ideal investment for retired people with excess cash. As things are, I would say they should invest in agri-business.” The economist said a majority of people could not afford to rent property at this point as there was a high number of unemployment and also the inflation was escalating drastically; so property was risky for them in the interim.

Meanwhile, he said agri-business was viable if the investment would focus on livestock which grazed and did not to be bought feed. It is worth noting that the unemployment rate according to the Ministry of Labour and Social Security’s Labour Force Survey 2021 has had an acute increase from 23.4 per cent recorded in 2016 to 33.3 per cent. The Central Bank of Eswatini (CBE) said credit extended to businesses rose by 4.0 per cent from the previous month and 18.3 per over the year to settle at E7.8 billion at the end of May 2022.

They said the Growth was recorded in credit to the following subsectors; distribution & tourism (15.3 per cent), community, social & personal services (7.2 per cent), construction (3.4 per cent) as well as transport & communication (2.6 per cent). CBE said the credit extended to other sectors amounted to E758.3 million at the end of May 2022, down by 10.4 per cent month-on-month and 57.6 per cent year-on-year.