• Prof. Mike Matsebula states that the middle class is the  biggest driver of the economy
  • Minister of Finance Neal Rijkenberg in response notes that they took decision after extensive consultation with international financial bodies

“You kill the middle class, you basically kill the economy” these were words uttered by Prof. Mike Matsebula during his address at the Post-Budget Seminar held at Sibane hotel last week.

Matsebula is the former Chief Executive Officer (CEO) of the Eswatini Sugar Association and has held numerous other senior positions in the country, such as being a Lecturer at the University of Eswatini.

He noted during his address that the middle class is the driver of the economy, and whatever changes the government wants to introduce, should ensure that the middle class is protected. He said even though the middle class is relatively small, it has the potential to drive the economy of Eswatini. The former CEO cautioned the government on ensuring that tax changes should be done in an empirical way, stating that policies must be evidence-based. He said most importantly these policies should ensure that they do not take away the purchasing power of the middle class. “What is the impact of tax changes on corporate taxation including the public enterprises on the middle class? These are the things we have to think about” he noted.

In response to the address by Matsebula, the Minister of Finance, Neal Rijkenberg noted that the decision to review the taxes in the country was done after extensive consultations with international monetary institutions such as the International Monetary Fund (IMF). He added that even if the proposed tax changes take place, they will be only effected in the 2023/24 financial year.

Summary of Proposed Tax Changes by Government

  •  Introduction of Capital Gains Tax for businesses
  • Proposition to have individuals start paying tax from E4 000 instead of E3 500 (applies to those earning E250 000 and below per annum)
  • Proposal to lift upper tax bracket from 33 percent to 36 percent for income earners earning more than E300 000 per annum
  • Proposed introduction of presumptive tax for SME’s to simplify their administrative processes and remove the requirement of audited financials for payment of tax
  • Proposed amendments to the VAT legislation and reconsideration of some non-vatable items that are not pro- poor and have standard rated VAT on electricity and domestic use
  • Reduction of Corporate Tax from 27.5% to 25%
  • Proposed introduction of tax on worldwide income for the residents of Eswatini

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