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Millers want government to scrap 15pct rice tax plan

04/01/2017 00:00:00
by Bloomberg I Staff Reporter
Grain Millers Association of Zimbabwe (GMAZ) chairman Tafadzwa Musarara

LOCAL grain millers want the government to halt a plan to impose a 15 percent tax on rice imports, which vie with corn as the southern African nation’s staple food.

Finance Minister Patrick Chinamasa proposed bringing back value-added tax on the grain, which was removed in 2009, in his budget presentation last month.

“A reintroduction of value-added tax will immediately trigger” a price increase of “at least 15 percent” and cut demand by about 40 percent, Grain Millers Association of Zimbabwe Chairman Tafadzwa Musarara said in a letter to Chinamasa dated Dec. 30.

“The re-introduction of VAT on rice will trigger a 15% price increase and this will no doubt create inflationary pressure on the food production chain and given the current prevalent low incomes consumers will not be able to sustain the price increases and will invariably reduce consumption,” Musarara argued.

“Besides government having not consulted the industry on this matter, there is no rice farming in the country which will be prejudiced its importation and continued suspension of VAT on it causes no harm to our economy,” he added.

Rice has become a key staple in Zimbabwe, with imports helping alleviate food shortages as rural parts of the country have been hit by the worst drought in at least two decades.

Rice consumption has climbed fourfold to 200,000 metric tons annually since 2009, with the grain beating corn and wheat as “the most cost-effective carbohydrate on the market,” the association said.

Current consumption levels account for more than 10,000 direct and indirect jobs, the association said.

Chinamasa is on leave until the end of January, his spokesman said. Calls to Secretary for Finance Willard Manungo went unanswered.


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