NEAL: SIN TAX, FEES, FINES INCREASE IN PIPELINE

MBABANE – Despite the drop in SACU receipts, chances that government will increase or introduce new taxes in the upcoming financial year are slim.

However, there is a plan to increase sin tax and the charges for fines and fees. This was stated by Minister for Finance Neal Rijkenberg during an interview with this publication.

With him expected to present the Budget Speech sometime this month, curiosity is already growing among emaSwati regarding what exactly he will say. During the interview, the minister shared how, besides relying on the Southern African Customs Union (SACU) Stabilisation Fund, the government will ensure that enough revenue is raised to guarantee efficient service delivery.

It was brought to the attention of the minister that the announcement of the SACU decline has caused panic, with some citizens fearing that the government might be forced to make tax amendments and introduce new taxes to generate more revenue. As announced two weeks ago, the Kingdom of Eswatini has seen a decrease in the amount of money generated from SACU receipts.

Revenue

Rijkenberg announced that the SACU revenue for the 2025/26 fiscal year will amount to E10.4 billion. This represents a significant decline of approximately 20.4 per cent from the E13.06 billion received in the current financial year, 2024/25. The decline was due to the hike in levies for importing certain vehicles, as well as the shift in fuel suppliers importing most of the commodity from South Africa instead of Mozambique.

The revenue receipts from SACU finance more than 50 per cent of the national budget, which is used by government for the construction of roads, building hospitals, buying medication, paying grants and civil servants’ salaries, among many other expenditures.

During the interview, the minister said it is not yet the right time to increase taxes or introduce new ones, as many households are still recovering from the financial pressures brought about by COVID-19. “What we might obviously need to try and do is consider sin tax, but again, we have to ask ourselves if it is the right time or not. Sin tax is costly to many people, as they end up in hospital, while others get involved in accidents due to alcohol. At the same time, our fees have remained the same, so we might need to increase them. That is just in the pipeline, and we might look into it next year,” the minister said.

The minister stated that by not increasing or introducing new taxes, government will have to continue its efforts to broaden the existing tax base. He gave an example of how the government still loses a lot of money due to value added tax (VAT) not being paid.

“A lot of the retailers in the country collect VAT when customers buy goods, but nothing is paid to the government. As a result, the Eswatini Revenue Service is working on some tools to try and close that gap. There are also digital platforms, and even devices, that we are looking into as we try to close the tax loopholes,” he said.

The Eswatini Government is not the only one considering an increase in sin tax. In neighbouring South Africa, it was announced in November last year that the Treasury Department aimed to alleviate the country’s drinking problem by raising taxes on alcohol.

Proposals

At the time, the South African Treasury gave a 30-day notice period for public comments on the alcohol tax proposals, which the liquor industry claimed was unfair and premature. The Daily Maverick reported that South Africa has a drinking problem, which the National Treasury hopes to address through new taxes on alcoholic beverages. 

It was stated that Treasury wanted proposals to assist government in developing ‘an appropriate excise policy framework to reduce the harmful use of alcohol,’ giving the public just a month to respond. The public comment period was set to close on December 13, after which the Treasury planned to revise the draft proposals and announce new tax hikes during the 2025 Budget, expected early this month.

The discussion document was premised on the World Health Organisation’s (WHO) absolutist view that alcohol is harmful to health and that there is no safe level of consumption, as outlined in a report published in January last year: “No level of alcohol consumption is safe for our health.”

The report linked even low alcohol consumption with an increased risk of premature death and disability. The Daily Maverick highlighted that WHO reported that alcohol causes more than 3.3 million deaths (or 5.3 per cent of all deaths) globally every year and is linked to more than 200 diseases and injuries. WHO studies show that alcohol can affect health at lower levels than previously understood, emphasising that the safest approach is to minimise consumption or avoid alcohol altogether.

The Treasury was said to have highlighted the affordability of alcoholic beverages as a critical factor affecting alcohol consumption. The department reportedly stated that it believes higher alcohol taxes and strategic pricing policies are effective ways to reduce affordability and address the social costs of alcohol abuse.

WHO recommends that excise tax increases focus on reducing alcohol affordability, with South Africa’s current excise taxes at 11 per cent for wine, 23 per cent for beer, and 36 per cent for spirits.

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