PLENTY MONEY, SMUG GOVT

Didn’t government learn anything from the 2010/11 fiscal crisis? Our economy in Eswatini has a limited private sector and so it relies heavily on government to drive growth. The implications of this economic arrangement is that government has to continuously implement expansionary policies in hopes to stimulate growth, which ends up in expenditures that exceed revenues and ever increasing public debt.

At the same time, the need for government to continuously borrow from the local economy is contributing to a liquidity squeeze which is hampering growth and employment opportunities such that we might as well forget about the prospects of living in a First World country.
But honestly, how can a broke government resuscitate economic growth and create opportunities for employment and business creation in Eswatini?

Government’s track record tells us that it is not capable of creating opportunities and driving growth, but really only capable of driving our economy into a fiscal crisis.
We’ve been here before in 2010/11, and the main reasons we find ourselves in another fiscal crisis seven years later, 2018/19, is because of weak governance and lack of sound public financial management.

Don’t be fooled to think that there is no money in this country! In fact, there is plenty of money in Eswatini, the problem is that our government is happy to suck all the money out of the economy and blow it in expenditures that do not add any value, or better yet, expenditures that do not eventually generate income for government and the nation as a whole.

The greatest achievement of our government was establishing its money vacuum cleaner, the Swaziland Revenue Authority (SRA). Through SRA, government will go out of its way to fill its coffers even if it means breaking the livelihoods of the most vulnerable people in Eswatini. Following the 2010/11 fiscal crisis, government introduced a set of new taxes to generate quick money, hoping that it would catapult the economy into prosperity. Yet again, in 2018/19, we wake up every day to new taxes being introduced by government to collect more money to try and save the current fiscal crisis situation.

Here is the irony; through the 2011 Economic Recovery Strategy (ERS), government proposed to promote a culture of saving by creating incentives to save. This entailed reviewing financial regulations to introduce special bank accounts with preferential interest rates, removing the prevailing prohibitive bank charges, especially for depositing money, as well as provide free internet banking.

It also involved broadening the tax base and net tax by including tax-excluded institutions/businesses/economic agents/goods/services.
But in all these taxes, government proposed to be strategic not to unnecessarily curtail economic activity and contribute to company closures.
Now ask yourselves this; are you able to save given all the taxes one is expected to pay in the economy? How many businesses are able to survive the tax environment created by SRA?

Income taxes are high, value added tax (VAT) is going up, fuel prices are up, electricity might incur a value added tax, just the other day, a six per cent levy was effected on non-SACU import vehicles, the list goes on and on. Taxing the economy through the roof in 2011/12 did not create new businesses and employment opportunities, but instead, further stagnated the economy, leading us to where we are today. What makes government think that taxing people and businesses this time around will yield different results?
The very few people in our economy who get the opportunity to work and earn a decent salary have to give up half of their pay cheques to government, yet it has the audacity to ask for more money on top of that.

If you earn a decent salary, SRA will take 33 per cent of your income. On your remaining income, you still have to pay another 15 per cent to SRA in the form of VAT on almost every good or service you buy in Eswatini. That makes 48 per cent of our incomes solely dedicated to taxes our government can collect and blow into thin air.

How does government expect us to save when everything that we earn ends up in the G-wallet so that it can be blown in non-priority expenditures? It is pretty obvious that government will continue on its cushy path to find new taxes so that it can collect extra money, and will also continue to do nothing to tighten its belt on how it spends the money collected.

One day government will wake up only to find SRA to tax, which will, in turn, find only the precious civil servants available to tax. By that time, the rest of us in the private sector will be done and dusted!

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