. . . in­dus­try hails tax regime

The Herald (Zimbabwe) - - Front Page - Kudzanai Sharara As­sis­tant Busi­ness Ed­i­tor

THE Tran­si­tional Sta­bil­i­sa­tion Pro­gramme re­cently an­nounced by Fi­nance and Eco­nomic De­vel­op­ment Min­is­ter Mthuli Ncube is a sound fis­cal ad­just­ment pro­gramme and, along with the amended 2 cents tax, must be im­ple­mented im­me­di­ately as a way of deal­ing with the coun­try’s dam­ag­ing fis­cal im­bal­ances, a lead­ing in­dus­trial body has said.

Within the last two weeks, Min­is­ter Ncube an­nounced two fis­cal mea­sures to deal with fis­cal im­bal­ances as a way of restor­ing macro-eco­nomic sta­bil­ity.

The mea­sures in­clude a 2 cents tax per dol­lar trans­ac­tion that was met with mixed feel­ings by stake­hold­ers.

The Con­fed­er­a­tion of Zim­babwe In­dus­tries (CZI) said yes­ter­day that the 2 cents tax, which was later amended and can still be fine-tuned, was nec­es­sary.

“The pro­posed 2 per­cent (cents) trans­ac­tion tax is de­signed to close the fis­cal deficit and re­store con­fi­dence in the RTGS sys­tem,” said CZI pres­i­dent Mr Sife­lani Ja­bangwe, who spoke on be­half of the busi­ness group­ing in the pres­ence of rep­re­sen­ta­tives from the Oil Ex­pressers As­so­ci­a­tion of Zim­babwe, as well as rep­re­sen­ta­tives of the Zim­babwe Sugar As­so­ci­a­tion.

“As a mat­ter of prin­ci­ple, economies are not de­vel­oped through over tax­a­tion. How­ever, we recog­nise that this tax was aimed at widen­ing the tax base and is vi­tal for ar­rest­ing the fis­cal deficit which must be dealt with im­me­di­ately.

“The 2 cents tax as sub­se­quently mod­i­fied by the Min­is­ter of Fi­nance on the 5th of

Oc­to­ber, with of course fur­ther ad­just­ment in con­sul­ta­tion with the pri­vate sec­tor, should go a long way in clos­ing the fis­cal deficit and restor­ing sta­bil­ity to the econ­omy.”

Mr Ja­bangwe said the tax was nec­es­sary as a short-term “shock-ther­apy mea­sure for the econ­omy”.

“We, there­fore, call on stake­hold­ers to ac­cept this painful ne­ces­sity to sta­bilise the econ­omy, we also call on Govern­ment to play its full part in sta­bil­is­ing the econ­omy and shar­ing the as­so­ci­ated pain by im­ple­ment­ing the mea­sures as out­lined in the TSP and re­turn­ing to zero deficit po­si­tion as soon as pos­si­ble,” he said.

Mr Ja­bangwe said since the tax was in­flict­ing pain on the en­tire econ­omy, and as­sum­ing col­lec­tive re­spon­si­bil­ity to cor­rect er­rors of the past, the Govern­ment was ob­li­gated to be fully trans­par­ent by ac­count­ing for the col­lec­tions and use of the tax.

“We must point out that this tax is not sus­tain­able over a pe­riod of time as it taxes each stage of the value chain and neg­a­tively af­fect the growth and com­pet­i­tive­ness of the value chains,” said Mr Ja­bangwe.

In light of this, Mr Ja­bangwe pro­posed that the tax ex­pire by De­cem­ber 2019 and this should be done through a time bound leg­is­la­tion to demon­strate Govern­ment’s sin­cer­ity and give the mar­ket con­fi­dence.

The sec­ond set of mea­sures were an­nounced un­der the Tran­si­tional Sta­bil­i­sa­tion Pro­gramme TSP), and were seen by Mr Ja­bangwe as nec­es­sary for the coun­try’s eco­nomic growth and de­vel­op­ment.

“We wel­come the fol­low­ing mea­sures as high­lighted in the TSP and im­plore Govern­ment to im­ple­ment these im­me­di­ately,” he said.

Mr Ja­bangwe high­lighted some of the mea­sures, in­clud­ing those that were meant to right size pub­lic em­ploy­ment, cut­ting trav­el­ling ex­penses, re­duc­ing fuel ben­e­fits and cur­tail­ing ve­hi­cle ac­qui­si­tions.

He said the CZI also sup­ports Govern­ment’s de­ci­sion to is­sue trea­sury bills through mar­ket based auc­tions and lim­it­ing new re­leases to the min­i­mum re­quired for fis­cal pur­poses.

Lim­it­ing Govern­ment’s over­draft with the RBZ to the statu­tory lev­els re­quired by law, as well as ac­cel­er­at­ing and re­struc­tur­ing the pri­vati­sa­tion of state owned en­ter­prises are some of the mea­sures that were also sup­ported by CZI.

Mr Ja­bangwe said the CZI was also in sup­port of Govern­ment’s plans to elim­i­nate bud­getary sup­port to state owned en­ter­prises as well as us­ing in­stru­ments such as guar­an­tees to sup­port them where jus­ti­fied.

He said the in­dus­trial body was also in sup­port of plans to right size Govern­ment staff, in­clud­ing ac­tion such as re­tir­ing all civil staff that are at re­tire­ment age and above.

The CZI also sup­ported plans to move to a mar­ket based for­eign ex­change al­lo­ca­tion sys­tem which is dif­fer­ent to the cur­rent sys­tem which is mod­elled along lines of a pri­or­ity list.

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