CONSUMERS LEFT WORSE OFF – ECONOMISTS

MBABANE – Economists are of the view that consumers have received the end of the deal in terms of the budget presented by Minister of Finance Neal Rijkenberg.

The minister announced several hikes in various taxes, mainly on consumables.
An economist, who gave his opinion under anonymity, said the minister could have thought that the reduction in corporate taxes would lure investors, hence his decision.

He noted that this could be possible but in the short-term, consumers would have to shoulder the fiscal crisis, with the hope that in future, government would consider reducing Paye As You Earn (PAYE).

In terms of the hike in fuel tax levy as well as the introduction of Value Added Tax (VAT) on electricity, the economist said this simply meant that ‘we will have less money’.

“You should understand that not many people are salaried, so the working class is basically carrying government’s expenditure from all angles. Remember that we still have to pay tax on other taxable goods and services.

The basic point here is that we will have less disposable income such that we will find ourselves spending less on other things. This will, in turn, shrink the economy because businesses will suffer as we will have less money to buy goods from the shops,” he said.
He mentio

ned that in a robust set- up, the business sector carried the economy. “The economy can have fewer companies but if they pay taxes, its fine. In Eswatini, it’s the other way round. It’s the working class or consumers who seem to finance government expenditure,” he said.

With the shifting of the tax bracket to 36 per cent for those who earn above E250 000 annually, the economist had this to say, “All those who thought they had decent money (income) will suffer. E250 000 is actually not a lot of money in such an economy.

Predictions

“We don’t have a proper middle class. Government should have targeted the ultra rich. My predictions are that government will make more money from taxing this bracket.”
When coming to the fuel tax levy of E1.20 per litre, he clearly stated that he was opposed to it.

“This is a huge scam. Fuel is an input for production, basically you need fuel for everything such as travelling to work, school and everywhere. This means transport costs will shoot up, same with production. The agriculture sector will also suffer because they need a lot of fuel for production as well. This will mean that products in shops will shoot up. So, what will grow the economy with the hike in fuel?

The cost of doing business will definitely increase,” he explained.
The economist mentioned that what was needed were bold, new ideas that would give the country momentum.

“All these things announced by the minister have been done before. So, what other new mechanisms is the government coming with?” he asked.
Sharing his own ideas, the economist said the hemp industry, which is basically the legalisation of dagga solely for pharmaceutical purposes, could be the answer.

“There is a need for government to give back to the taxpayers who have been carrying government for a long time. We certainly need some relief this time around,” he added.

Post your comment

Your name:

Your e-mail address:

Add your comments:

Please enter the code you see in the image:

Image:

Code: