‘New tax quick fix to econ­omy’

Chronicle (Zimbabwe) - - Front Page - Oliver Kazunga Se­nior Busi­ness Re­porter

GOVERN­MENT can raise about $3,4 bil­lion through the newly in­tro­duced In­ter­me­di­ary Money Trans­fer Tax of two cents, which will widen room for cap­i­tal fund­ing and re­tool­ing of the man­u­fac­tur­ing sec­tor, a tax ex­pert has said.

Last Fri­day, Fi­nance and Eco­nomic De­vel­op­ment Min­is­ter Pro­fes­sor Ncube an­nounced up­per and lower lim­its for the In­ter­me­di­ary Money Trans­fer Tax as part of the broader fis­cal sta­bil­i­sa­tion mea­sures. Un­der the new frame­work, trans­ac­tions be­low $10 will no longer at­tract the two cents tax, while all trans­ac­tions above $10 to $500 000 will com­ply with the new tax regime.

Bu­l­awayo-based tax ex­pert, Mr Peter Mgodi, told del­e­gates at the Zim­babwe Na­tional Cham­ber of Com­merce (ZNCC) Mata­bele­land re­gion 2018 mid-term mone­tary pol­icy state­ment re­view on Tues­day that the In­ter­me­di­ary Money Trans­fer Tax was a quick fix to the econ­omy.

Based on last year’s to­tal trans­ac­tions of 1,7 bil­lion, Mr Mgodi hinted that chances were high that the coun­try would achieve that fig­ure or even higher.

“The prob­lem now is that this is now an ad val­orem tax (a tax whose amount is based on the value of a trans­ac­tion).

“The as­sump­tion is that some will be trans­fer­ring $20, oth­ers will be trans­fer­ring thou­sands of dol­lars while oth­ers will be trans­fer­ring mil­lions. And when we av­er­age the trans­ac­tions and come to $100, it means we will make $2 per trans­ac­tion and not five cents and there­fore the min­is­ter’s pro­jec­tion will be $3,4 bil­lion,” he said.

Mr Mgodi said in 2017, the Zim­babwe Rev­enue Author­ity (Zimra) to­tal rev­enue col­lec­tions were within the $3,4 bil­lion range.

“Given Zim­babwe’s bud­get deficit . . . as a Fi­nance Min­is­ter rais­ing $3,4 bil­lion in two years or even three years is bril­liant.

“This is a tran­si­tional pol­icy and a quick fix to try to get us to the dry ground,” he said.

Pres­i­dent Mnan­gagwa has said the tax, which the Govern­ment has an­nounced, was not de­signed to hurt the or­di­nary peo­ple and com­pa­nies, but to help the man­u­fac­tur­ing sec­tor to get funds for re­tool­ing and mod­erni­sa­tion as the econ­omy gears to ramp up pro­duc­tion.

Mr Mgodi said premised on the pre­vail­ing eco­nomic cli­mate, what busi­ness will do is to wait and see whether they are op­er­at­ing as an­nounced by Govern­ment.

“And when peo­ple are happy, then we will see more con­fi­dence with those bring­ing in for­eign cur­rency try­ing to source more.

“But it will only de­pend on what they see hap­pen­ing on the ground. The prob­lem in Zim­babwe is that we have no con­fi­dence in our Govern­ment.

“So, even now with the new Min­is­ter of Fi­nance (Prof Mthuli Ncube) peo­ple still want to see whether he is not un­der the in­flu­ence of the pay­mas­ters. So, all these things will be con­sol­i­dated by the con­fi­dence in the coun­try,” he said. — @ okazunga

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