Eswatini
Corporate tax incentives reduce investment costs for businesses, which may affect investment and location decisions. They apply through different designs and interact with countries’ standard tax systems, often making it difficult for tax policy makers and researchers to compare their generosity and assess their impacts across countries. This paper develops a methodology to calculate forward-looking corporate effective tax rates (ETRs) summarising tax relief from investment tax incentives into comparable indicators. It presents ETR indicators for seven Sub-Saharan African countries. Empirical results show that tax incentives substantially lower corporate taxation across these countries. On average, tax incentives reduce ETRs by 30% in the food and automotive industries compared to the standard tax treatment. ETRs often differ among taxpayers in a same sector and country - by up to 55%. The most generous tax treatment is typically offered within Special Economic Zones, where tax incentives can reduce ETRs to near zero.
South Africa: Inbound tourism: International arrivals and receipts appears in OECD Tourism Trends and Policies 2010.
The year 2013 presents an opportunity for the government to redirect its fiscal policy by utilising the projected high SACU receipts and to address some of the longer-term fiscal challenges. In this endeavour, the government can draw on reform recommendations in its updated Fiscal Adjustment Roadmap (FAR), which, over the medium term, puts emphasis on: i) adoption and implementation of the Public Finance Management (PFM) Bill; ii) removing pro-cyclicality of fiscal policy; iii) developing a medium-term expenditure framework (MTEF); and iv) strengthening domestic resource mobilisation. The fiscal measures, together with reforms of the investment climate and the development of comprehensive social protection schemes, are needed to bring the economy onto an inclusive growth path.
The year 2012 presents an important opportunity for the government of Swaziland to utilise judiciously the projected large increase in Southern African Customs Union (SACU) receipts. The right fiscal measures, if accompanied by decisive reforms, could put the economy on a path of strong and inclusive growth. It is also a chance for Swaziland to draw on its strengths, including its strategic location, relatively diversified production base, and skilled labour force. For Swaziland, 2011 was a challenging year. Real GDP grew by 1.1% while the 12-month inflation reading hit 7.8% in December. The country faced a severe fiscal crisis, due to a sharp fall in SACU receipts, an historically high level of expenditures (especially wages), and the government’s limited access to borrowing. The crisis led to cuts in capital and social spending, undermining future growth. With government arrears of about 4% of GDP at the end of 2011, including debts to private contractors, the crisis has hurt an already struggling labour market and made things worse for small and medium enterprises (SMEs).
After averaging 2.9% during 2004-08, economic growth in Swaziland significantly dropped in 2009, mainly due to the impact of the global economic downturn on export-oriented sectors, in particular textiles and wood pulp. Other contributory factors were prolonged drought and low levels of foreign direct investment (FDI). In 2010, the economy moderately recovered with a rebound in global demand mainly for sugar and textiles. However, falling receipts from the Southern African Customs Union (SACU) coupled with lower internal revenues constrained the government's ability to implement counter-cyclical measures. In order to support economic activity in 2010, low interest rates were maintained in line with those of South Africa. However, the main focus of the Central Bank of Swaziland continued to be price stability. Inflation was 4.5% in 2010, down from 7.5% in 2009. This was mainly driven by lower prices for food and transport. Inflation is forecast at 7.7% in 2011, reflecting the lagged impact of increases in tariffs for water and electricity in 2010. The anticipated fuel and food crises are also expected to impact domestic price levels.
Swaziland is Southern Africa’s second-smallest economy after Lesotho and it faces a host of economic challenges in the short and medium term. the combination of low investment, the end of EU preferential treatment for the country’s main sugar and textile exports, low productivity, deteriorating trade receipts, low domestic resource mobilisation and the ongoing effects of the global economic crisis mean that sustained growth will remain elusive. Indeed, years of persistently sluggish growth have resulted in an expansion of poverty and unemployment. Moreover, the alarming 32.4% prevalence rate of HIV/AIDS will continue to exert undue pressure on government resources and has restricted Swaziland’s annual population growth to about 0.4% since 1997.
The Constitution of Swaziland, adopted in February 2006, grants the same legal rights to men and women, but tradition continues to limit women to inferior roles. Legislation in Swaziland is based on a dual system of traditional and civil law. Several discriminatory laws are still in force, having not yet been aligned with the anti-discrimination measures in the Constitution.
SWAZILAND’S REAL ECONOMIC GROWTH declined to an estimated 2.6 per cent in 2008, down from 3.5 per cent in 2007 (Figure 1). The slowdown was a result of weak private investment, poor implementation of the public investment programme, and lower demand for exports. The global slowdown is expected to hit Swaziland’s exports and access to capital, and so reduce growth further to 2.5 per cent in 2009 and 2 per cent in 2010.