NEW TAXES TO IMPROVE SERVICE DELIVERY

MBABANE – Frustration over arrears by government suppliers will soon be history, as collection from the new taxes will impact and improve service delivery.

The Minister of Finance, Neal Rijkenberg, introduced value-added-tax (VAT) on electricity and also fuel levy.

The benefits that are to be achieved by the business community entail spin-offs of being paid timely and government delivering all its services. Eswatini Revenue Authority (SRA) Commissioner General Dumisani Masilela, said the introduction of the taxes by government had various implications. The commissioner general said despite that his organisation shall collect E94.2 million less, due to the pay-as-you-earn (PAYE) shift, the country would benefit from the proposed taxes.

“The taxes proposed by government have various implications,” he said.
He noted that the VAT to be accumulated from electricity was not yet quantified but would present an opportunity to entrepreneurs to explore the renewable energy sector.

Masilela said the introduction of VAT on electricity presented the country with not just a chance to increase its revenue collection but also opened floodgates to the exploration of renewable energy production. Renewable energy is energy that is collected from renewable resources, which are naturally replenished on a human timescale, such as sunlight, wind, rain, tides, waves and geothermal heat.

He said this presented the entrepreneurs with an opportunity to explore the sector following that they would now be able to reclaim their VAT. He said before the introduction of the VAT on electricity, those that were exploring this sector would remit the tax but failed to claim it back as there was no law against such.
The commissioner general said: “Despite that the VAT was currently not quantified, the idea is to promote investment in the generation of renewable energy.” Supporting Masilela was an economist, who gave the interview under anonymity. The economist said looking at developed countries that were exploring the renewable energy sector, including the solar and wind power generation segments; they had created vast amounts of employment opportunities.

Invest

The economist said entrepreneurs who were to invest in the long-term would create job opportunities in excess of 15 000. He said the green energy sector could outpace fossil fuel energy as investment opportunities providing 12 per cent higher annual returns, 20 per cent lower annual volatility and 61 per cent higher risk-adjusted returns than the coal and natural gas sectors had been witnessed in developing countries like India.

He said this was contained in a study conducted by Climate Policy Initiative and Indian School of Business along with experts from Jawaharlal Nehru University (JNU) and Indian Institute of Technology (IIT)-Delhi.
The animated scholar expressed enthusiasm as he stated that investors were at a great time to produce green energy as it was less risky than fossil fuel-based energy.

The economist said this was mainly attributed to the shortcomings which impact the profitability of the fossil fuel energy sector including sourcing issues, import dependence, long construction periods, environmental regulations, low plant load factors and stranded coal. The study also found that higher renewable energy generation corresponds to lower unemployment, fewer net energy imports, lower fiscal deficit and higher GDP.

Power

Meanwhile, the country has four hydro power stations operated by Eswatini Electricity Company (EEC). The hydropower stations are; Maguga Hydropower Station, Ezulwini Hydropower Station, Edwaleni Hydropower Station, and Maguduza Hydropower Station all serving as peaking and emergency power stations. These stations have a combined installed generation capacity of 60.4 megawatts (MW), and contribute (EEC´s internal generation) 15-17 per cent of the total energy consumed in the country, with the rest imported largely from ESKOM in South Africa, and some from EDM in Mozambique.

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