MPS OK 7% SIN TAX HIKE

LOBAMBA – “I don’t even know how we got here, but I am happy that we got the seven per cent we wanted.”

This was the reaction of Minister of Finance Neal Rijkenberg yesterday after a roller coaster debate on the controversial Alcohol and Tobacco Levy Bill, 2019.
Initially, when acting Chairperson of the Finance Sessional Committee Ndzingeni MP Lutfo Dlamini motivated the debate, it seemed as if the House of Assembly agreed with him that the implementation of the seven per cent increase be staggered.

The Committee had proposed that the seven per cent increase be staggered first this year by four per cent and in 2020 by three per cent.

Motivation

Dlamini, in his motivation, said about five stakeholders had come to make submissions and these were businessman Walter Bennett, Eswatini Beverages Limited, CANGO, British American Tobacco Swaziland and Eswatini Business.
He said they had listened to all views and considered government’s position, including that of the business community.

He said they had recommended the staggering of the seven per cent levy because it was their finding that smuggling of the two products (alcohol and tobacco) was rife and that there were no clear measures to curb this illicit trade hence they proposed the staggering as government put the control measures in place.

He was supported by Maphalaleni MP Mabulala Maseko, who said as much as they understood the economic challenges and the need for payment of taxes, however, it was crucial to stagger the sin taxes.

“In the past we knew of cigarettes called Peter Stuyvesant, which retails at E3 per stick, however, now there are cigarettes called GT which only retail at E1.40,” said Maseko.

He said in the past they had also agreed to the staggering of transport costs where public transport operators had demanded a 50 per cent increase, but it was agreed that it be staggered by 25 per cent each year.

Another MP who supported the four per cent only increase in 2019 was Shiselweni II MP Strydom Mpanza, who said the increase would not be a deterrent to alcohol and cigarette users.
He said for example police had increased fines for drink-drivers, but people continued to abuse alcohol.

Violence

Mpanza said actually the increase in the levy would cause further gender-based violence and people would buy alcohol instead of food for their families.
He also said the tax base would also dwindle because people would consume the illicitly acquired products.
Lugongolweni MP Enos Magongo said emaSwati would now go and purchase cigarettes in South Africa as they would be cheaper there.
Lubombo MP Lorraine Nxumalo proposed that the levy should only be increased by four per cent.

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