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THE one per cent increase in Value Added Tax (VAT), which comes into effect next month, will remain a painful reminder of our former representatives in Parliament.

We will soon be experiencing the ripple effects of this increase that is set to take more out of our already depleted pockets. Our MPs wasted five years busying themselves with power struggles instead of getting government to make our country work so that we get to enjoy a reduction of taxes and poverty.

Well the measure of their success is the misery we are about to endure because it is a given that the rest of the tax hikes are on their way in the absence of immediate alternatives to raise funds for the cash-strapped government.

When delivering the national budget and trying to justify the need to raise taxes, Finance Minister Martin Dlamini kept repeating the fact that government has not been able to raise enough revenue to cover the ever-increasing expenditures, saying this was a clear indication that the current government model could not be sustained in the medium-term. He promised to adopt a fiscal consolidation, reform and recovery strategy that would address the fiscal challenges and create the needed fiscal space for investment and social spending.

The minister talked of rightsizing the public sector that would make government more agile and efficient in delivering public goods and services. He talked about re-enforcing fiscal consolidation to strategically interrogate all budget items, including the wage bill and transfers to public enterprises.

 What has not emerged from these statements is the visible action towards fixing the current government model he referred to in his speech. Instead, greater urgency has been directed towards raising taxes to continue funding what he has described as an ‘unsustainable model’. The message from the Throne to government had been to put together a budget that would compel the State to spend on what it could afford, not to leave people with less to spend on themselves.

Minister Dlamini claimed to have heeded His Majesty the King’s call, but the tough action still seems to be directed towards poor consumers. Logic dedicates that before taxing the people, government needed to have exhausted non-priority expenditure cuts if it were serious about making things right.  We can’t be left to assume that he is leaving that to the new minister and his colleagues; unless there is no plan. I am reminded of the words of Andrew LeRoux, the President of the Federation of Swaziland Employers and Chamber of Commerce (FSE&CC), who lamented the lack of a clear strategy on how to get the country out of the woods.

This was during a post-budget seminar earlier this year. He said the best response he could get from those who should know the answers and offer solutions was; “Sitawubona khona” (we will see when we get there). During this seminar, as well as in many other forums, there were loud calls around the need for greater consultation by government in order to produce a pro-poor budget that would work for our economy. LeRoux and others said they were ready and willing to play their part but were being frustrated by the lack of consultation prior to proposing tax or legislative reforms.

He cited the frustration of the industry over the amount of time it takes to register a business, the high corporate tax, lack of accountability in providing services to the people, rising corruption levels and other business restrictive processes, which could all be addressed with regular engagements.

He wasn’t alone. I do recall university lecturer Sanele Sibiya warning government against taxing people for the wrong reasons without any tangible effort to curb recurrent expenditure. Sibiya said unless the tax increase came with an increase in zero rated commodities in order to cushion the poor, the minister’s budget was taxing the poor to fund the rich. He quoted Winston Churchill who warned; “For a nation to try tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.”

The minister of Finance never got to respond to these issues as he had to leave for Parliament. Those who posed the questions were promised answers via email. One can only guess what the responses were, given the latest gazette on the VAT. This could only mean all the other proposed taxes are on their way. If they come without an extensive reprieve for the poor, then this should serve as the first assignment for those we elect to serve in the eleventh Parliament. If they don’t, then we shall forever remain standing in a bucket trying to lift ourselves up by the handle. And we should blame nobody.


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