Furore over fuel levy

Furore over fuel levy

Fuel retailers around the country have declared that the proposed tax hike on fuel will come in tough should it be finally passed due to the increased pump price. Finance Minister Neal Rijkenberg is seeking parliament approval on a proposed introduction of an E1.20 fuel levy per litre. The setting comes as a result of government’s bid to mobilize domestic revenue targeted at E900 million this financial year. If the pump price is increased due to the
government levy, the normal fuel price will rise as was the case in South Africa, where 74 cents was added. Retailers argue that fuel is a cost driver and any increase will impact every retailer, including small business operators and the unemployed. Occasionally, even the unemployed will board transport to and fro prospective places of employment, and so they cannot be left out. Retailers say the fuel levy is a stop-gap exercise to fix past wrongs, and should not be seen as a growth measure. Meanwhile economists have observed that the recovery
exercise is a long term project and requires total commitment on all sectors, including the ordinary man in the street. Independent economists observed that hiking taxes is not the solution and that the public will be worse of, seeing that areas such as salary adjustments or even the COLA issue were not considered by the Minister for Finance during his budget speech. Rijkenberg said COLA was the most contentious economic issue in the country and that the wage bill was placing insurmountable pressure on the budget. He said government had been under immense strain to pay salaries due to the cash flow crisis and thus no adjustments would be made. Observations also showed that the stimulation of the economy could be achieved by increasing the buying power of the citizens, a stance which could be achieved by looking into adjustments of income. There is a need for companies whose production is for exportation, all to obtain foreign currency and with that be able to provide employment. Public opinion showed that hiking taxes, including on fuel, would impact negatively on families and workers in general as the reduction of buying power would affect the basket content. “Families would barely afford the basics to last a full month,” said an observer who didn’t want to be mentioned. The retail industry in general would be highly affected and supplies like new clothes would be a luxury. A retailer in one of the petrol stations demonstrated that, like electricity, fuel was a cost driver and an input cost and she wondered how value could be added on such. She said the
government of Eswatini had an obligation to ensure that it balanced the scales on expenses versus income. She said to do away with deficit drivers like corruption and least necessary expenses, government could focus on bankable projects to develop finances and SACU receipts could only be left for operational costs. With such a move, she guaranteed that the economy could be stimulated. She agonized that in the next financial year, all would be
doom if the targeted income would not be realized. In 2018, VAT was raised from 14 to 15 percent and there was no positive impact on alleviation of poverty. Instead, she said, there was perpetual deficit on government.

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