Times Of Swaziland: A MORE LEVEL PLAYING FIELD

A MORE LEVEL PLAYING FIELD
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Chris Morgan on 30/06/2022 08:24:00


The factors of production – bear with me, the sports pages can wait – are
simply the contributors to what produces your food, motor car or hair restorer.
Incidentally, on the last mentioned item don’t believe the adverts; I’ve
tried them. The factors of production are split into fixed and variable. The
variable ones – raw materials, labour, power, fuel – are those that are
increased or decreased according to production needs. A fixed factor of
production is one that cannot, at least in the short-term, be increased or
decreased according to need. This includes buildings and machinery. And the one
that is fixed, in both short and long-term, is land; also the most sensitive and
hotly contested, especially in small countries. There endeth the economics
lesson.
Land
In urban areas of most countries the ownership of land is taxed, the revenue
being, in the English-speaking world, known as ‘rates’. These are, in
Eswatini, set by local governments in accordance with categories of property
ownership and utilisation. In Mbabane, for instance, a rating percentage is
applied to assessed property values, depending on whether the property has been
developed, and is for commercial or residential use. This article is not about
the whys and wherefores regarding city rates other than to mention that your
rates bill is a tax bill. Like with central government, your tax payments are
not identified as being allocated to a specific service. You may live along a
road full of potholes, with unsightly neighbouring building developments and
only half the street lights working. You pay tax which is a contribution towards
the total of local government costs, regardless of what you actually get. Like
it or lump it.
Access
As a property owner within the city boundary, you have access to the city, its
roads and its services. But, there again, so do people outside the urban areas
of the country, as well as access to the national roads and bridges in their
area; and not paying any property tax. Therein lies an anomaly and a substantial
potential source of income for the country. I emphasise the word ‘country’
because it should not be revenue for central government other than as an
intermediate recipient. Outside urban areas there is plenty of land; and vast
areas lying unutilised. A substantial proportion of that is Swazi Nation Land
which is an entirely separate issue, though hopefully with modernisation, such
as long leases, planned in order to empower emaSwati to make the transition from
subsistence to commercial agriculture. One also hopes that the huge tracts of
previously unused government-owned land are now being productively utilised.
This article is only about a separate category – title deed land in those
rural areas. And there are stacks of it, with the owners not paying a cent of
property tax, and many of them not even living in Eswatini – partly a
historical anomaly – and certainly not using the land. That doesn’t make any
sense at all. We should have a tax on title deed land outside urban areas.
Within the agencies of central government in this kingdom, there will be records
of who owns what around the country. A basic ad valorem tax per hectare could be
applied to title deed land, with a substantial discount – even exemption –
for property being utilised for productive or socially-oriented activities,
which can include agriculture and other commercial development, nature reserves,
churches and schools.
The revenue collected by the central government could then be allocated for the
purposes of small, medium and micro-scale enterprise (SMME) development in the
respective rural areas, perhaps through tinkhundla offices. Close to 70 per cent
of the population lives in such areas, so there’s a huge degree of isolation
currently endured by them. They need empowerment to pursue commercial
activities. The money can be used to build estates of small industrial and
commercial units. This will not only encourage greater decentralised
concentration of business activity but also more compact residential development
– a longstanding dream of this country. What follows then is commercial
efficiency and the economies of scale within such concentration, with
electricity, water and other supplies provided more cost-effectively.
This is not brain surgery or rocket science. But, at the same time, you can’t
just press a switch and the process is activated. It requires a project, though
not one to gather dust on shelves after it’s completed. And even when
implemented, in the initial development stages there can be anomalies in
applying a flat rate per hectare; that can be resolved. The fundamental
objective is to utilise the available land in the country for the benefit of the
people of the country, especially the poor and non-empowered. This article is
identifying a source of funding that can bring real opportunity to the rural
folk of Eswatini; one that ticks every box in sight. I won’t be popular with
some for offering this suggested initiative, but that doesn’t matter. It’s
for the greater good.