Africa-Press – Eswatini. Members of Parliament have fired warning shots at the Minister of Finance Neal Rijkenberg on the proposed pay as you earn (PAYE) tax hike, choosing to label the proposal as a still born.
Some of the legislators indicated that they would debate the matter further once the bill is tabled while others vehemently opposed the proposal, insisting that it will not be accepted. What began as a slow debate quickly gained momentum as more and more MPs expressed their feelings on the proposed 36 per cent PAYE hike for those earning E25 000 and above monthly.
This was during the budget speech debate and replies by the House of Assembly yesterday.
During the delivery of the budget speech, Minister Rijkenberg announced that government intended to lift the tax bracket, leaving more cash in people’s pockets earning less than E250 000 per year. He said individuals would now only start paying tax from E4 000 per month instead of E3 500 per month.
“Unfortunately, we cannot afford to have this reduction other than lifting the upper limits of those earning more. The proposal is to lift the upper tax bracket from 33 per cent to 36 per cent,” he said. The minister explained that this would mean that 80 per cent of the taxpayers would be better off with more money in their pockets and 20 per cent of higher income earners paid more than E300 000 per year would be worse off.
He asserted that it was understood that this would negatively affect everyone and appealed to all affected to put the interest of the poor above their own. This measure would be addressing the income inequality in the country. Manzini North MP Macford Sibandze, who was among the first MPs to make their submissions, insisted that he was against the proposed tax hike. He highlighted that during the launch of the strategic roadmap in 2019 government spelled it out that it would not create economic growth through taxation.
“Fast forward to 2022, government does a cynical contradiction,” he said He stated that government was flirting with danger and he would not say that the timing was bad because there would never be a good timing for such.
“Our country is too small to be reduced to a Bosnia-Herzegovina lapho sitawudlana sodvwa ngekutsi nje we are not sensitive,” said Sibandze. He said the country was in a perilous feud and it was not proper that government perpetuated a polarised and decisive discourse. He said the tax increase would unite critics of government and those who support it and the centre would not hold.
He added that government was expected to be making efforts to decrease PAYE to 30 per cent to be at par with many other SADC countries. “In fact I move that we do not even debate this issue and this should be considered a warning shot to the minister that this will not be accepted. Instead we should be focusing on reducing the 33 per cent,” added Sibandze.
He further urged the minister to table the average PAYE in the SADC region. Meanwhile, Lobamba Lomdzala MP Marwick Khumalo also stated that he was against the proposed tax hike instead was expecting a tax reduction not an increase. He said currently, Eswatini has the highest direct income tax at 33 per cent in the SADC region in comparison to the other states, citing Lesotho with its 30 per cent, Botswana at 25 per cent while Mozambique is at 20 per cent.
“Already we have the highest direct tax in the region, and the proposed increase will see a 9.1 per cent increase. What is the justification for that? This issue is still-born and will not take off.
Akakhohlwe,” said Khumalo. He said the country was bleeding and government should instead consider tax reduction to leave people with more money in their pockets.
He added that people were suffering, as there was already too much indirect tax such as the fuel levy, Eswatini Electricity Company (EEC) levy and VAT, to name a few. “We are also leading in terms of indirect tax. My friend, forget it, if I were you, I would not even pilot the bill as this is not accessible,” he added.
Khumalo said the proposed lifting of the tax brackets from E3 500 to E4 000 was a little too late, and should have been done years ago as it was last lifted not less than 10 years ago. He said he understood that the minister wanted to generate revenue, but this would not be accepted. Motshane MP Robert Magongo told the minister to forget it, as this was time for elections and would turn the electorates against them.
“Wena minister awuthayimi you should have brought this earlier not now while we are gearing up for elections. We are gearing up for elections, give us a break. Instead we will reduce this,” he said Lugongolweni MP Ntethe Magongo said lifting the tax bracket will not benefit the people and this was not the right time to increase tax. Somntongo MP Dumisani Mbhamali also said he was against the tax hike.
“Lena ayivakali kahle, people are already complaining that the 33 per cent is too high, while there has been no salary increment for years and by increasing tax, you would be taking the little they have,” said Mbhamali. On the same note, Kumethula MP Derrick Masuku said he was expecting government to decrease and not increase tax.
He also stated that the taxation of pensioners was a cause for concern and should be exempted from paying tax as they have been taxed their whole lives. Lubombo MP Lorraine Nxumalo said she was against the proposed tax hike and urged government to find other ways of generating revenue instead of increasing the burden on the already suffering Emaswati.
Gege MP Musa Kunene said it was good that there would be a dialogue as it was not right that whenever government wanted to generate revenue, they would increase taxes. Lobamba MP Allen Stewart said the proposed implementation of the cost of living adjustment (CoLA) will be counter productive if the tax hike was implemented.
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