GOVT TARGETS BUYERS OF SHARES

MBABANE – The cash-strapped government of the Kingdom of Eswatini is looking everywhere for money.

At a time when emaSwati are warming up to the idea of buying shares in companies, the desperate government is targeting to make money from individuals and groups of businesses that want to acquire shareholding in other entities.
Government wants to be paid an amount equivalent to 12 per cent of the value of the shares that are being sold and transferred.

This is a significant increase from the one-and-a-half per cent that government has all along been entitled to from such transactions.
This is on top of government having proposed numerous taxes that will negatively impact consumers.
This is contained in the controversial Finance Bill of 2018.

Under marketable security, the Bill, under paragraph (3) (a) states that E12 of every E100 or part thereof of the amount or value of the consideration given, or of the marketable security transferred should be paid “in respect of the registration of transfer of marketable security if transfer is registered before the expiry of a period of six months from the date of execution of the relevant instrument of transfer”.

The Stamp Duties Act of 1970 defines marketable equity as “any security, stock, debenture, share or other interest capable of being sold on a share market or exchange or otherwise, and, where the context requires, includes the scrip, certificate, warrant or other instrument by which the ownership of or title to any such security, stock, debenture, share or other interest is represented and the right of option to acquire any share stock or debenture, of a company or corporate body, other than a building society, local authority, the Swaziland Credit and Savings Bank, the Swaziland Electricity Board, the Swaziland Railway and such other statutory body as the Minister may designate by notice in the Gazette”.

A senior manager of a reputable audit firm decried this increment of the transfer duty and said it was going to discourage businesspeople from acquiring stakes in other companies.
Making an example of this he said: “If you own shares in the Times of Swaziland and you want to sell them to me, previously I would have to pay government stamp duty of one and a half per cent (E1.50 per E100) but the new proposal is to make that 12 per cent (E12 per E100) . That’s a disincentive for business.”

He said if one studied the existing provision against the proposed one, the wording was identical but only the numbers had been changed.
The proposed stamp duty, when looking at the recent E60 million worth of shares given to Swazi Mobile customers by the mobile telecommunications company, would have seen government pocketing at least E7.2 million in the registering the transfer of the shares.

The Stamp Duties Act of 1970 and the proposed Bill both state that if the transfer is registered after the expiry of the six months period, an amount that is three times the duty that would have been paid within the six months would become due.
This would mean that in the stamp duty would then be E36 per E100 (36 per cent) and this would have seen government pocketing E21.6 million from the E60 million Swazi Mobile shares given to customers.

Fears of record petrol price hike

On another note, there had been fears that the Bill was coming with an unprecedented increase in the price of fuel by a record E3.20 a litre, catapulting the cost of petrol and diesel to over E16 a litre and making it one of the most expensive in the African continent.

This was based on the E3.20 per litre that has been proposed on both petrol and diesel as fuel tax – a move that would have made fuel even most expensive than in neighbouring South Africa where, historically, it has always cost more than in the Kingdom of Eswatini.

However, it has since been stated that there will only be a 20 cents increase in the fuel tax from an existing E3.00.
The proposal, titled ‘Imposition of Fuel Tax’, states that “there is introduced a tax to be levied on the sale of fuel and to be known as fuel tax...” which is at the rate of E3.20 a litre.
This led to a senior economist telling this publication that this “is going to hurt consumers”.

President of the Federation of Swaziland Employers and Chamber of Commerce Andrew Le Roux brought perspective to the whole matter and stated that the fuel tax increase was 20 cents but comparatively not huge.
“Any increase is a concern to business, but still much lower than our regional competitors,” he said. 

The Swaziland Fuel Retailers Association had also expressed utmost concern over the proposed tax, describing it as “totally detrimental to the country” and “targeting the man on the street who is already being taxed heavily”.
Sean Stewart, the Chairman of the Association, said consumers were being burdened more considering that they were already paying Value Added Tax on commodities, including the latest increase on electricity.

“This is not correct. Government should find other alternatives of raising money and also cut costs, not the way they are doing it. This is not good for the consumer. It’s going to make everything expensive; your transport fare will go up, your bread and milk costs will shoot up. This is crazy!” Stewart said.
 

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