CUTTING TAXES WILL CREATE BIGGER CHALLENGE - FINANCE MINISTER

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.

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