In a candid appearance before the House Assembly’s Finance Committee, Minister for Finance Neal Rijkenberg defended proposed amendments to the Eswatini Revenue Service (ERS) Act with a striking biblical metaphor: “You mustn’t muzzle the ox while it is threshing the wheat.” His warning was clear: If the State continues to starve the ERS of timely operational funding: “There is no wheat for anybody.”
The amendment would allow the ERS to retain a portion of its operational funding directly from tax collections before remitting the balance to Treasury. Rijkenberg pointed to international benchmarks where tax authorities operate at roughly a four per cent cost-of-collection mark.
In principle, this reform shields the ERS from Treasury’s chronic cash flow delays, ensuring it can modernise systems, retain skilled auditors and pursue tax evasion aggressively. In a volatile global economy, where conflicts involving Iran, Israel and the United States have already reshaped Eswatini’s fiscal outlook, protecting the State’s revenue engine is undeniably pragmatic.
Risks to fiscal discipline
Yet pragmatism alone cannot obscure the structural risks. Centralised treasuries exist to maintain holistic control over national resources. Allowing the ERS to bypass Treasury and retain funds at source erodes this principle. Once one agency secures ring-fenced funding, others may follow.
The Ministry of Health could argue that delayed allocations cost lives; education could demand direct access to school levies. The danger is a fragmented fiscal system, where insulated fiefdoms replace centralised oversight.
The precedent problem
This amendment risks setting a precedent that undermines democratic budgetary control. Autonomy without accountability breeds inefficiency. If the ERS’s budget automatically grows with tax collections, unchecked expansion is inevitable. A guaranteed cash flow can encourage bureaucratic bloating, unless Parliament enforces strict oversight. Feeding the ox is wise, but who ensures it does not consume more than its share? How do we ensure that the operational structure of ERS is maintained at optimal levels and not just growing proportionally, as the four per cent allows year on year, at the detriment of national revenue goals?
Furthermore, this breeds a classic principal-agent problem and a managerial behaviour problem. Managers do not care about the objectives of the shareholders, rather they care about their emoluments. How will the amended Bill ensure that the goal remains revenue collection and not managerial benefits?
Also, what about other entities collecting user charges? The hospitals can also argue that they need to retain the user charge for operations and the police may also argue that transport fines must be retained to ensure operational feasibility. The dominos may fall to levels where we can no longer sustain the central pool.
Macro-fiscal trade-offs
The short-term fiscal impact is stark. If Eswatini’s annual tax collections reach E20 billion, a 4 per cent retention translates to E800 million withheld from Treasury upfront. That is E800 million less for civil servant salaries, debt servicing and urgent public services. Government is betting that a well-funded ERS will expand the overall revenue base enough to offset this shortfall. In a fragile economy, that gamble could trigger severe fiscal friction.
Safeguards for accountability
If Parliament proceeds with the amendment, it must legislate ironclad safeguards to prevent fiscal erosion and bureaucratic excess. Expenditure should be capped and tied directly to performance metrics, ensuring that the ERS’s operational growth is justified by measurable outcomes. Annual parliamentary audits must be mandated to scrutinise the agency’s financial practices and maintain transparency. Any surplus funds beyond the four per cent cost-of-collection benchmark should be promptly reverted to the consolidated fund, reinforcing the principle that retained revenue is strictly for operational necessity, not institutional expansion.
Finally, transparent reporting mechanisms must be embedded in the legislation so that citizens can clearly see the value derived from the ERS’s guaranteed funding. Without these guardrails, the amendment risks creating an insulated bureaucracy that grows fat while the State itself starves.
SARS
A useful comparison can be drawn with South Africa’s Revenue Service (SARS), which is often cited as one of the most effective tax authorities on the continent. SARS enjoys a high degree of operational autonomy, but crucially, it remains firmly tethered to Treasury oversight. Its funding model does not allow it to retain a fixed percentage of collections at source; instead, allocations are made through the national budget process, ensuring that Parliament and the Ministry of Finance maintain centralised control. This balance between autonomy and accountability has enabled SARS to modernise its systems, professionalise its workforce and achieve relatively strong compliance outcomes without undermining fiscal discipline.
For Eswatini, the lesson is clear: Autonomy can strengthen a tax authority’s effectiveness, but it must be carefully designed within a framework of centralised budgetary control. Otherwise, the ERS risks drifting into insulated self-financing, a path that SARS itself has deliberately avoided in order to preserve national fiscal cohesion.
Though the ox must not be muzzled, SARS remains a revenue-collecting entity and cannot be permitted to act as though it were a category. A public enterprise. Instead, the minister ought to make an undertaking to ensure that operational funds to ERS are not delayed. I think a fitting Bill would be one that ensures that ERS is prioritised in resource allocations.
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