Times Of Swaziland: CUTTING TAXES WILL CREATE BIGGER CHALLENGE - FINANCE MINISTER

CUTTING TAXES WILL CREATE BIGGER CHALLENGE - FINANCE MINISTER
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Stanley Khumalo on 07/07/2022 09:03:00


MANZINI – Cutting taxes will create a bigger challenge for the country, says
the Minister of Finance.
Neal Rijkenberg was sought to establish if the options that were being brought
forward by some of the economists engaged by this publication would yield the
desired outcomes and what impact they would have on government. He was informed
that pursuant to the increment of fuel by E2.30 per litre and the proposed hike
of bread by E2.88, economists supposed that government should offer relief to
consumers through subsidising bread, fuel and or cutting tax. Given these
options that were shared by the economists, Rijkenberg was asked if it would be
possible for the Ministry of Finance to cut taxes following that it had already
set a budget for the year and was expecting taxes to also fund it. He was also
asked if taxes were to be cut, how the deficit would be covered and lastly, if
government were to subsidise either fuel or bread prices, where would the money
come from.
The minister responded by saying that the administration fully understood and
appreciated the additional pressures that the population was under, due to these
price escalations. He said: “The poor are normally earning salaries below the
PAYE (pay-as-you-earn) threshold. They normally do not pay VAT as the goods they
buy are VAT exempt. They also do not own companies that pay corporate tax.”
Challenges
Rijkenberg said cutting taxes had two challenges, which included that it would
not assist the underprivileged as much as intended and that civil servants and
other services rendered by government would not be funded, which would then
create a bigger challenge.  The minister said government was still cushioning
the fuel price and that some of the measures that were put in place when the
COVID-19 crisis hit the country were still in place, such as the reduced
repo-rate. He said the main staple food in Eswatini was maize, secondly rice and
thirdly bread. The minister also said they were working on a strategy with the
Ministry of Agriculture to subsidise the maize price by increasing the input
subsidy. He said this would be announced in due course.