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WE NEED TAX RELIEF!

13/06/2018 05:11:00 By Thabiso Dlamini

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THE tax we pay is just simply too much. SRA’s Pay As You Earn (PAYE) system is a huge burden on workers who wake up every day to work to fend for themselves and their families. The income tax system in Eswatini places a huge burden on the individual worker such that the income tax revenue collected from individuals is almost twice the company tax collected by SRA.

For instance, in the 2016/17 budget, government collected E2.7 billion from individuals compared to E1.5 billion from company tax, also known as corporate tax. Yes, companies give us jobs which we so desperately need to earn our living as individual workers; however, there seems to be many provisions made to relieve companies than there are to take care of the individual worker in terms of tax relief.
The effective tax rate for companies since 2013 is 27.5 per cent while the lowest paid worker in Eswatini pays 20 per cent of their income, with the highest income earners paying as much as E47 500 plus 33 per cent of the income in excess of E200 000. In other words, some people in Eswatini pay close to half of their pay cheques to SRA!

With the proposed tax changes announced in the 2018/19 National Budget, which included a levy on bank incomes, levy on alcohol and tobacco, increase in user-fees such as graded tax, etc, government hopes to increase its graded tax income by five times, that is an increase from E1.543 million to E7.643 million.

Who will be the hardest hit by this inflation of graded tax? Of course it is the individual worker. Not everyone gets the opportunity to work in a cushy job; for a majority of EmaSwati, this will be a huge dent on their disposable incomes if they have any. In the case of the bank levy, government hopes to make as much as E86.3 million from taxing bank profits. On the levy on alcohol and tobacco, government anticipates to collect E30 million while the tax on lotteries and gaming are to generate E21.8 million in 2018/19 rising from E7.7 million in 2017/18.

It would be a different story if the money collected would eventually get back to the individuals who pay it to make their livelihoods a little bit more comfortable. Tax collected by government has to improve the standard of living of its citizens. With so much tax collected, people should not have to feel the need to send their children to private schools because of run-down public schools, workers should not have to dedicate a huge share of their incomes to medical aid fees because of inefficient and ineffective public hospitals here in Eswatini. We are a very small population and with the E14.8 billion that government generates from the economy, it should be very easy to take care of all of us.

A quick scan of the adopted recurrent expenditure for 2018/19 on the E14.8 billion budget, a whopping E1.151 billion will go to the Ministry of Defence, of which E938 million (close to E1billion) will be dedicated to salaries. Another E76 million within the defence budget goes to the Central Transport Administration (CTA), which basically means many of the personnel enjoying the E1 billion salaries will spend a bulk of their time on government vehicles running ‘government’ errands. The Education Ministry takes a huge portion of the budget, about E3.172 billion in 2018/19. Yet again, about 76 per cent of the E 3.1 billion goes to pay salaries which cost E2.395 billion and only E36 million goes to actual services.

With a substantial portion of the money collected from people and companies going to fund government salaries, paying tax in Eswatini becomes a painful and huge burden on the dedicated people who want to see this country reach its developmental goals and prosperity for all. As a people, as individual workers, we need to start asking questions about the tax we pay, and SRA has to implement a more humane approach to its income tax collection systems so that people who are just barely surviving can also overcome their income struggles.

On top of the PAYE, individuals still have to pay Value Added Tax (VAT) on all the goods and services they consume, and even though companies do pay VAT as well, they can claim it back if they are VAT registered with SRA. As individual workers, we need more money in our pockets to support increased consumption of the goods and services produced by the economy.

When that happens, businesses can employ more people, more people can start their businesses and government would end up with a wider tax base rather than taxing the same people through the roof. It is high time SRA starts implementing tax relief mechanisms for individual workers: the 20 per cent to 33 per cent tax rates are just too high. We are suffocating!