Swazi tax greed risks prevention of Aids

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Mbabane - As the Swaziland economy continues to collapse, its government has sought to impose tax on donated condoms, blood-testing equipment and other items used to prevent and treat Aids.

In Swaziland, which has the world’s highest percentage of people living with HIV, about 40 percent of sexually active adults are HIV-positive.

“The VAT Act doesn’t list condoms or CD4 count machines as exempted or as a zero-rated commodity, meaning they are taxable,” said Vusi Dlamini, director of communications for the Swaziland Revenue Service.

Condoms worth R6.5 million were detained for six weeks at a Swazi border post while tax officials sought R400 000 VAT payment from the non-profit Aids Health Care Foundation which distributes free condoms.

“Our worry was that the storage conditions were not good. While the condoms were detained, they were exposed to the sun,” Dr Nduduzo Dube, the foundation director, told Swazi media. “Our plea to the Swaziland Revenue Authority was that the condoms should be released to us for better storage.

“This was suggested to ensure that after the problem was sorted out, we would not be left with ruined condoms. I had to go to Swaziland Railways and ask them to put containers on the sides and on top just to block the sun from scorching the merchandise,” Dube said.

“This was not the first time that we experienced a similar problem as our CD4 machine had to stay with the clearing agent for about four months at the border. We can’t be saying (Swazis) are fighting HIV when at the same time we are carrying an axe against anyone who tries to make an effort. HIV is a disaster,” said Dube.

The condoms and CD4 machines were released after the importer convinced tax authorities their work was not for profit. Tax officials would not discuss the case of the waylaid Aids materials because tax files are confidential.

“However, without specific reference to the case of Aids Healthcare Foundation, there is a provision in the VAT regulations for the exemption of ‘donor funded aid projects’ and the process is that any person who needs to benefit from this exemption shall apply to the office of the commissioner-general who may grant or deny that exemption,” said Dlamini.

It was the foundation’s threat to ship the condoms to Zambia, where they would not be taxed, that swayed Swaziland’s tax officials to release the consignment, said Dube.

Because Swaziland imports medical supplies, health groups fear the government’s appetite for taxes will cause more delays and harassments.

The government imposed VAT last year against the advice of economists, who said a hefty new consumer tax during a recession would stall or reverse economic growth. Desperate for new revenues, King Mswati allowed VAT to proceed, hoping consumers and businesses would make up for revenue shortfalls elsewhere.

Manufacturing has flatlined and the agricultural sector is stagnant. Foreign-direct investment stayed away from Swaziland this year.

While VAT has raised some revenue, this was at the expense of economic recovery. While the rest of southern Africa is experiencing modest post-recession growth, Swaziland’s GDP growth is the lowest in the SADC, contracting to a negative 0.3 percent last year.

On Monday, the Swaziland Solidarity Network, a pro-democracy group whose activities are prohibited, noted: “All condoms are taxed in Swaziland, not only those sold commercially, but also the ones that are given freely to the public.

“The government itself does not purchase condoms to give to the public; it relies on hand-outs from sympathetic organisations such as the Aids Health Care Foundation. This means that the taxes from these donated items do not go towards fighting HIV, but end up on Mswati’s plate.”

Independent Foreign Service

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