New Zimbabwe.com

CZI cautions against ‘over-taxation’, urges one year lifespan for 2% transfer tax

By Robert Tapfumaneyi

ZIMBABWEAN industrialists have called on government to scrap its controversial 2 percent electronic transfers levy within a period of one year while cautioning that economies were never “developed through over-taxation”.

Under the so-called Transitional Stabilisation Programme, Finance Minister Mthuli Ncube imposed the levy a fortnight ago in attempts to give government room to repay its debts.

This has however triggered economic commotion last seen in 2008 with prices of goods and services shooting through the roof as panic gripped both producers and consumers.

Briefing the media on their position Friday, Confederation of Zimbabwe Industry (CZI) president Sifelani Jabangwe urged government to ensure the levy was scrapped by December next year.

“Given that through this tax, we are inflicting pain on the entire economy and assuming collective responsibility to correct government errors of the past, the government is obligated to be fully transparent by accounting for the collections and use of the 2% tax,” he said.

“We must point out that this tax is not sustainable over any extended period of time as it taxes each stage of the value chain and negatively affects the growth and competitiveness of value chains.

“We propose that the tax expires by December 2019 at which point we expect that Government would have adjusted its expenditure mix to match collections and more targeted ways of broadening the tax base will have been developed.”

The introduction of the new tax measure has seen manufacturers and retailers hike prices of goods as they try to cushion themselves from the added costs.

President Emmerson Mnangagwa has told locals this was necessary austerity intended to mend an economy that is weighed down by heavy debt.

His deputy Kembo Mohadi this week also issued threats to businesses against hiking prices as he vowed to revoke licences from those failing to comply.

However, CZI insists “all sectors should be allowed to reflect this cost in their pricing”.

In his address, Sifelani appealed to government to first consult stakeholders before introducing far reaching decisions that shock send shockwaves into a fragile market.

“…Going forward, a formal multi-stakeholder review process should be established immediately to track progress on the implementation of the Transitional Stabilisation Programme.

“We note that the economy has been growing despite the challenges and there is no doubt that if Government plays its part in restoring fiscal and monetary stability by living within its means, we will see a rapid stabilisation of the economy and continued growth towards making this country a middle income economy by 2030.

“As matter of principle economies are not developed through over taxation, however, we recognise that this tax was aimed at widening the tax base.

“However, given the gravity of the current crisis in confidence, we recognise that it is vital that the fiscal deficit is dealt with immediately.

“We therefore call on all stakeholders to accept this painful necessity to stabilise the economy,” he said.