Friday, December 07, 2007

Taxing Food

"Bread used to be called the white or rich person's maize, and maize was the Swazi's or poor person's bread, but now both are beyond reach almost, and it is making more people dependant on food aid," said a food aid distribution officer at the village of Mliba

Crippling drought is responsible for a decline of up to 80 percent in maize harvests in some parts of the Swaziland . Over 400,000 people out of a population of 970,000 now need some form of food aid to survive.

The price of a loaf of bread will jump by 10 US cents, and by the end of the year a loaf may cost US$1 in a country where over 60 percent of people live on less than US$1 a day .

But the radically escalating price of bread is not related to Swazi weather; no wheat is grown in the country. Rather, it is because of the government's desire for tax revenue. Through its price-fixing arm, the National Agricultural Marketing Board , an 8.5 percent levy is fixed on all wheat imported into the country.

"Swaziland, the nation with the worst food crisis per capita in the southern African region, has the most expensive flour in the region. This is because of government tax," said the manager of an industrial bakery. Bakeries say they can no longer absorb the high cost of flour without passing on the increases to consumers. If forced to shut down, they warned that 2,000 jobs could be lost in a country where formal-sector unemployment is above 40 percent. Some bakeries are coping by cheating, and stories about undersized loaves of bread feature extensively in the local media.

Why is the Swazi government charging wheat importers this levy when there are no farmers producing wheat in Swaziland who need to be protected from unfair competition?

A shopkeeper and restaurant owner in the central commercial town of Manzini says "This is all about tax revenue for government. Why are they taxing food during a food crisis? It makes no sense - it's just greed."

Finance minister Majozi Sithole told parliament last week that government receives only 20 percent of the customs duties due to it because of the under-declaring of goods and other cheating at border posts. Since 2004, he has reported annually that the amount of money lost to government through various forms of corruption is equal to the nation's annual debt.

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