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TAX REVENUE EXPECTED TO DROP BY E400M

01/12/2022 08:12:00 Mhlengi Magongo

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MBABANE – Tax revenue is expected to be down by over E400 million, the non-tax revenue is expected to perform over the budget by about E200 million.

This was mentioned by Minister of Finance Neal Rijkenberg, who exclusively said the overall revenue was also estimated to be down by E180 million. The minister said as it was half year, government had collected E7.8 billion in revenues, reflecting 40 per cent collection of the projected annual revenue of E19.3 billion. He said grants received at half year amount to E68 million and Sothern African Customs Union (SACU) receipts declined from E6.38 billion in 2021/22 to E5.82 billion in 2022/23 which is equivalent to 8.88 percent in the current year. “We received E2.9 billion from SACU receipts compared to E3.2 billion in the year 2021/22. This reflects the decrease of SACU receipts expected this year when compared to last year. This source of revenue continues to prove volatile and there is little control to manage it,” he said. The minister mentioned that domestic revenue collection at half year amounted to E4.8 billion, which was just above the E4.47 billion collected at the same time last year. He said this showed an improvement in domestic taxes due to efficiencies in collections made by Eswatini Revenue Service (ERS).

Collections

“Income tax remains our largest contributor to domestic revenue collection. Company tax, PAYE, Graded tax and other income tax collections stood at E2.6 billion at half year. This equates to 37 per cent of the annual revenue collection and is higher than the E2.2 billion collected at half year in 2021/22. It is anticipated that the opening of the economy will improve performance going forward,” he added. Company taxes collected during the first half of the financial year amounted to E674 million, reflecting 32 per cent of the annual company taxes projected of E2.1 billion. Individual taxes, that is Pay as You Earn (PAYE), collected at half year amounted to E1.65 billion. This equals a 38 per cent collection of the projected annual PAYE of E4.29 billion and compared to E1.49 billion collected at the same time last financial year.

Taxes on goods and services constitute our second largest contributor to domestic revenue collection. VAT collection is the largest source within these taxes. At half year, this totalled E1.57 billion, 41 per cent of the projected annual VAT collection of E3.83 billion. The minister said the collection of VAT showed a slight increase compared to the 2021/22 collections in the same period, which was E1.42 billion. Tax arrears in Eswatini increased by 29per cent to E9.369 billion from E7.262 billion in 2020/21. The minister said the COVID-19 pandemic coupled with other economic and social disturbances weighed on current and future growth prospects. He said these challenges continue to threaten our ability to maintain our tax revenue mobilisation goals. Tax arrears increased by 29 per cent to E9.369 billion from E7.262 billion in 2020/21.

Rijkenberg mentioned that these disturbances continued to affect the economy, thus decreasing the domestic revenue collections. “As a result, domestic revenue collections in 2021/22 were 10 per cent below estimates which was about E1.235 billion,” mentioned the minister. The minister further said that the increase in tax arrears was a concern for the ERS and government, and the introduction of the Tax Debt Relief Programme was one of their efforts to contain the increase that has averaged 25.1 per cent per year. ERS Commissioner General Brightwell Nkambule, said ERS would hold employers responsible for failing to declare PAYE they had collected from their employees.

Employees

Nkambule said many companies and organisations had a tendency of collecting PAYE from their employees and not submitting it to ERS. He said, afore, ERS use to directly collect the PAYE which is 33 per cent of the employee’s salary, but they changed that system and entrusted their employers to collect on their behalf. “We will be strict on employers who fail to submit PAYE they collected from their employees as well as those that fail to declare the number of employees they have,” said the acting commissioner. To support this motion Minister Rijkenberg said an Income Tax bill had been tabled in parliament to punish employers and agents for the PAYE collected and not declared. Business Eswatini Nathi Dlamini thanked the ERS and the ministry for listening to their plight as businesses of Eswatini.

Dlamini said he was grateful that tax amnesty were attained immediately after the Tax Indaba, where the issue of compliance was discussed. He said when he approached the ERS they were able to honestly engage following the discussions they were all in attendance. He said he cannot wait to send a message of attaining one objective of the tax indaba to businesspeople. He further pleaded for more discussions on the issue of capital gains and other taxations that are a challenge to businesses. He said he pays tax be-grudgingly but he was happy when he sees that it was paying for the elderly grants, scholarship for students and fixing of the roads. Eswatini Commercial Amadoda Albert Mbuyisa disclosed that their clients were struggling with the technology attached to paying tax through their cellphones. He said their clientele were challenged by the technology that was now attached to dealing with the issues of tax. Mbuyisa said ERS must be accessible to their members where they would have to teach and engage members to ensure compliance was attained.