Prices spike over new tax plan

PRICES shot up by up to 10% yesterday, as suppliers and manufacturers reacted to the introduction of a 2% tax on money transfer transactions by new Finance minister, Mthuli Ncube in a move that could hit consumers hard as retailers warned of further price hikes.

BY TATIRA ZWINOIRA/FIDELITY MHLANGA

A woman shopping in a retail outlet in Harare yesterday. Prices of basic commodities shot up in most shops after Finance minister Mthuli Ncube on Monday announced plans to introduce a 2% tax on monetary transactions.

While taxation on electronic transactions has been on the books since January 2003 at five cents per transaction, Ncube’s move is seen as part of government’s efforts to widen its tax base by taxing the informal sector, whose effect will raise the cost of living for the majority.

Confederation of Zimbabwe Retailers (CZR) president Denford Mutashu told NewsDay that in light of the new tax rate, suppliers and manufacturers yesterday morning started sending notices to retailers effecting price increases of up to 10%.

“So, the citation was on the two cents per dollar tax and obviously, the parallel market rates also went up today (yesterday). This means that further price increases are likely if manufacturers, retailers and wholesalers do not get foreign currency allocations,” Mutashu said.

A snap survey showed that prices of some basic goods at a number of retail shops in Harare’s central business district, which include cooking oil, mealie meal, flour, washing powder and rice, had gone up.

“Some of the prices are slightly different from when I came here the previous day,” one TM Pick n Pay shopper who identified himself as Tony said.

Shortages of bread were also reported in retail outlets towards the end of business yesterday.

Rates on Zimbabwe’s black market rocketed after the announcement.

As of yesterday, a $100 USD note was fetching $230 in electronic transfer, while the R100 note traded at $14 in bond notes and $16 on electronic transfers.

“The premium on the US dollar is currently at 130% and this is lucrative business for us,” a cash dealer, who did not identify himself, told the NewsDay.

Parallel market rates have been skyrocketing ever since Ncube opined that he planned to scrap the bond notes, which he said were a surrogate local currency, “but without the fundamentals to support it”.

On the Zimbabwe Stock Exchange, market turnover jumped over 1 000% to $4,36 million from $358 739,74 recorded on Monday as investors sought cover in company shares to preserve value of their money.

The market’s total valuation rose 6,53% to $13,24 billion from $12,43 billion the previous, while analysts said a bull run was likely if the uncertainty persisted.

“I think it is a knee-jerk reaction and I think people are still digesting what is coming out of the monetary policy and the fiscal measures. But, it is those initial moves that show that investors are seeing value preservation in the shares,” the Stockbrokers” Association of Zimbabwe vice-chairperson Arnold Dhlamini said.

“It also looks like a lot of liquidity wanted to find a home quickly, but for government, what it wants to achieve is to remove a lot of liquidity from the market.”

15 Comments

  1. There’s going to be so much strife under the junta that by the time Chamisa comes into power the rest of the minority who voted for ED will be truly grateful to God that a Messiah has been sent to rescue the country

  2. @ Truth – do not be a prophet of doom. The economy is now being realigned. It will be tough especially for the likes of you who have been surviving on rent seeking activities. The narrative has changed bro…..produce and you and the whole country will smile

    1. Kiboz…Zimbabwe does not deserve your pfeeconomics

    2. And this is why Zimbabweans will NEVER prosper… the “get on with life” mentality is just a way of ignoring confrontation.

  3. kiboz pfutseki

  4. Unzo wekwa Zvimba

    Uyu wamunoti Kiboz anorwara uyu

  5. @kiboz what alignment are you talking of if u need 2000 as a charge to transact 100 000 my bro open yr eyes…. hw do u pay fees fr yr kids

  6. bt kiboz what are you producing where using materials from where…. imagine all my savings that i thot was US dollars its now nothing

  7. Zimbabwe is now open for business kkkkkkkkk

  8. That percentage is very high 2%. I think 0.5% is more reasonable. For anyone that money is going to multiply anyway because no one is going to access cash. If the company pays it paying my salary then i pay it as well purchasing goods and services then the retailer pays it as well to the suppliers and the supplier does the same to manufacture who does the same for raw materials the collection base will be huge for the Gvt. They need to be sensitive to their citizens and reduce the burden for individuals.

  9. Kiboz uri zibenzi chairo ukut allignment ipi nhy bharanzi

  10. Dzakambonyura zvino dzavakunyura ataurisa pfuti kumusana kutonga kwaro

  11. kiboz urizibenzi remunhu chairo.what sort of ‘alignment’ are you referring to?

  12. Comment…@ kibos ..vana vembwa havasvinuri musi umwe chete ….. what’s good n interesting is we are buying from the same shop

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