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GOVERNMENT CANNOT TAX ECONOMY TO PROSPERITY

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HOW much money does it take to run the different government ministries and departments? It is no secret that almost half of the money collected by government through our painful tax system goes to funding the wage bill, and in no time the wage bill will definitely spill over to E8 billion per year.

Another bulk of the money collected by government goes to capital expenditure/capital projects which in total claim a substantial E5.6 billion of the total E16.4 billion of government revenue and grants. This means about 81 per cent of the total revenue and grants collected each year are dedicated to paying civil servants and funding capital projects.


Government then has to make do on a measly E3.1 billion to actual operations/programmes of the different ministries, departments, and units that provide services to the public. To put some perspective on the E3.1 billion, it is barely enough to pay government’s suppliers. For instance, in the 2017/18 financial year, government wrapped up the year owing well over E3 billion to its suppliers, putting a serious strain on the various private sector companies that rely on government tenders to justify the existence of their businesses.

It is not surprising, therefore, that government usually has to turn to financing options (both domestic and external loans) to cover the budget shortfalls, and in 2018/19 total financial shortfall is expected to be at E5.2 billion.

Why is it so difficult for government to pull itself out of the cash-flow challenges? A similar question is why is it so difficult for government to tax the economy to prosperity? The thing is, besides the domestic and external loans, government generates almost all of its money through taxes. To cash in more money, government always looks into what else or what other goods and services as well as economic agents it can include to its list of taxable items.

We are tax items and the more money people generate in the economy, the more government sinks into their pockets. The tax burden on the economically active people and their businesses is simply too high and is increasingly becoming a limiting instrument to economic growth and prosperity in the country.


The problem is that even with such a heavy-handed tax system, less than 20 per cent of the money goes to the provision of real public goods and services that can improve people’s lives and add value to the economy. The dwindling private sector pays huge taxes to pay for inefficient civil servants that really add no value to increasing the amount of money earned by government and the economy as whole year on year.


If the Police Service has a claim of E818 million; the Ministry of Defence E939 million; and the Correctional Services E396 million just in salaries alone, then how much do the police, the soldiers, and the warders contribute to value creation and Gross Domestic Product (GDP) in the economy of Eswatini? If Emaswati are being programmed to become police officers, soldiers, and warders, who will start the businesses, the industries to produce real goods and services, and who will become the scientists, the engineers, the real private sector working class and entrepreneurs that the country needs to generate GDP and the money government needs to fix its cash flow challenges?


The truth is, the country needs real industries to generate the income that government desperately needs to pay for the inefficient civil servants it keeps accumulating. Government needs a real private sector working class and business owners to turn the economy into prosperity. Tax upon tax will not grow the economy, but will only give government more money to waste and more reason to increase the public sector. The sad reality is that government pays more in police salaries (E818 million) than it does to procure medicines (E461 million) for the various hospitals and clinics in the country.


Let us see more of the tax being paid by the private sector going into value creation and profit making development programmes in the Kingdom of Eswatini. Taking money from the private sector to maintain or expand the public sector will only drain more money from the economy and discourage people from starting their own businesses to drive economic growth in the country.  One by one, we will all turn to government for handouts because an honest living, where one earns his/her own keep, has become too expensive with government digging deeper into our pockets. If only government could for a second take a leap of faith and let people keep and enjoy a bigger share of the money they earn, perhaps the economy could take a different turn for the positive. After all, isn’t that how “free economies” are supposed to work?

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