Privatisation to yield $350m Reprieve for taxpayers, firms to get incentives
THE Government is expected to reap proceeds of up to $350 million in 2019 from the privatisation of key State-owned enterprises (SOEs) and parastatals, the Minister of Finance and Economic Development, Professor Mthuli Ncube, said yesterday.
Among the enterprises earmarked for the privatisation programme are Zimpost, NetOne, TelOne, Telecel and the People’s Own Savings Bank (POSB). Presenting the 2019 National Budget Statement in Parliament, Prof Ncube said Zimpost, TelOne, NetOne, Telecel and POSB would be privatised under a joint venture arrangement.
“Government is going ahead to implement the long delayed parastatal reforms as these institutions ought to play a key role in transforming the economy, among the several drivers we need to embrace. I place it on record that we need to forge ahead with rolling out our parastatal reforms on a roll out template, which categorises the entities under the State-owned enterprises to be partially privatised under joint ventures and listing, Stateowned enterprises to be fully privatised and those facing liquidation,” said Prof Ncube.
“The 2019 budget assumes proceeds of at least US$350 million being raised from privatisation.”
The parastatals earmarked for privatisation have been given timeframes of between 12 to 18 months t o conclude privatisation deals. Prof Mthuli Ncube said the privatisation of SOEs was in line with Government’s commitment to transform the country’s economy.
He said the Government would, however, refrain from taking over all or part of the debts that these entities have accrued, adding that not all debts are risky to potential investors.
Prof Ncube is on record as stressing the need to reform the parastatals given the inherent inefficiencies, which saw Government spending $500 million supporting struggling SOEs and parastatals over the last two years, as the perennial loss-making entities continued to drain public funds.
The entities used to contribute 40 percent to the economy, but poor management, corruption and weak governance systems have seen them run down with contribution to the economy plummeting to just two percent.
A total of 38 out of 93 State-owned enterprises audited in 2016 incurred a combined loss of $270 million as weak corporate governance practices and ineffective control mechanisms took their toll.
Prof Ncube said those that need to be liquidated would go under the hammer, with already three targeted for dissolution, while a further seven State-owned entities would be departmentalised into line ministries. Some of the parastatals and SOEs earmarked for privatisation include 17 Zimbabwe Mining Development Corporation (ZMDC) subsidiary mines, Road Motor Services (RMS), Infrastructure Development Bank of Zimbabwe, Kingstons, Willowvale Mazda Motor Industry, Zimglass and Zimbabwe
Grain Bag. — @mashnets. GOVERNMENT has extended a string of fiscal incentives to consolidate growth of the productive sectors and provided relief to tax payers in view of prevailing economic hardships.
In his 2019 National Budget Statement, the Minister of Finance and Economic Development, Professor Mthuli Ncube, announced a renewal of rebate facilities for companies, subject to set conditions and expansion of some to key productive sectors. The minister noted the burden on ordinary tax payers and the need to attract and retain skilled human capital. He said Government was keen to cushion low income taxpayers against rising prices of basic goods.
“I propose to review the tax-free threshold from the current US$300 to US$350 and further widen the tax bands from US$351 to US$20 000, above which income is taxed at the highest marginal tax rate of 45 percent, down from 50 percent,” said Prof Ncube.
He also said the two cents electronic tax would be further reviewed to factor in stakeholder concerns on the need to reduce the cost of doing business.
Prof Ncube said the clothing manufacturers’ rebate for large scale firms would now cover additional fabrics that are not locally produced with effect from 1 January 2019.
In line with the Transitional Stabilisation Programme thrust of supporting sustainable micro, small and medium enterprises growth and development, he proposed to avail a ring-fenced manufacturer’s rebate facility to micro-small to medium enterprises, subject to meeting prescribed conditions, with effect from 1 January 2019.
Noting continued low domestic production of raw milk requirements, Prof Ncube proposed to increase the ring-fenced milk powder requirements for 2019, with effect from 1 January 2019.
For the baking industry, he said in order to reduce the cost of production and minimise price escalation particularly on bread, which is a basic household commodity, Treasury has proposed to introduce duty free importation of raw materials under a manufacturers’ rebate with effect from 1 January 2019.
To mitigate against a potential shortage of poultry products as a result of the Avian Influenza and restore viability of the industry, Prof Ncube proposed to ring-fence duty free importation of fertilised eggs for the year 2019.
He further extended the ring-fenced suspension of duty on luxury buses for a year to ease the local transport challenges and comfort for cross border travellers.
“I propose to ring-fence importation of 100 public service buses of a sitting capacity of at least 60 passengers at a reduced customs duty rate of five percent. These measures take effect from 1 January 2019,” the Minister said.
The Treasury boss also increased excise dutyfree ring fenced import quota for 12 months to supplement wine supplies.
Similarly, the fertiliser manufacturing industry will benefit from a proposed ring-fenced duty free importation of raw materials with effect from 1 January 2019, for 12 months.
Customs duty on ammonium nitrate fuel oil fertiliser would be suspended for 12 months to reduce costs of inputs. Similar rebate benefits have also been extended to furniture manufacturers, the tourism sector and the pharmaceutical sector for procurement of key raw materials and inputs. Prof Ncube, however, chided unscrupulous profiteering at the expense of patients who cannot afford drugs.
He said Government would, thus, continue to prioritise allocation of foreign currency for the purchase of raw materials in order to ensure availability of critical drugs. Prof Ncube further postponed the 15 percent tax on the exportation of unbeneficiated platinum to January 2022, noting progress and commitments made by PGM producers towards beneficiation. He also exempted the sale of excess hides from export tax to encourage forex generation and suspended duty on goods for use by physically challenged persons. Similar exemptions were made for Value Added Tax on statutory medical regulatory authorities as well as Withholding Tax on contracts in order to provide relief to schools that have accumulated tax arrears from failure to withhold tax.
Prof Ncube further proposed to exempt the Reserve Bank of Zimbabwe from the requirement to withhold 10 percent of amounts payable in cases where the recipient of interest accruing from Treasury Bills failed to produce a tax clearance certificate during the period 1 February 2009 to 30 November 2018.