Storm over new tax regime

A HARARE businessman yesterday gave government 14 days to reverse the new measures introduced by the central bank to tax 2% of all electronic transfers, failure of which he will approach the Constitutional Court to seek recourse.

BY BLESSED MHLANGA/XOLISANI NCUBE

The developments come as the Zimbabwe Congress of Trade Unions (ZCTU) warned that workers would tomorrow start demonstrations against the new measures, which they say will further erode their incomes and savings.

Through his lawyers, Alex F & Associates, businessman Arnold Mutsondi, who reportedly operates several companies, said the purported review of the intermediated money transfer tax, which resulted in an “exorbitant, usurious and exponential” rate of two cents per very dollar, was unconstitutional in terms of section 71(3) of the Constitution.

“The Constitution provides, inter alia in section 71(2), that every person has a right to property which includes their money.

It is our client’s fortified view that the move by your esteemed ministry to arbitrarily impose an exponential tax on its transaction or those of fellow Zimbabweans cannot be accepted in a democratic society,” he said in a letter addressed to Finance permanent secretary George Guvamatanga and copied to the Zimbabwe Revenue Authority and Reserve Bank of Zimbabwe governor John Mangudya.

The lawyers said no reasonable notice was given by the ministry before the operationalisation of the “usurious” tax rate as required in terms of Section 71(3) .

“While the levying of the tax is permissible in terms of Section 71(3) on the basis of a law of general application, section 71(3)(c)(i) requires reasonable notice to have been given by the ministry considering the far-reaching implication of the tax rate in question.

The fact that the ministry purported to operationalise the usurious tax effectively on October 1, 2018 renders the actions by your ministry unlawful on the above basis,” the letter reads.

“The purported tax rate of two cents for every dollar is ridiculous, akin to fraud and induces a sense of shock to our client and the general public in Zimbabwe.

“It is common cause that currently, there is no adequate cash resources in Zimbabwe.

Mindful of this fact, it is clear that our client, and Zimbabweans at large, appear being punished for the government’s failure to provide cash, as they have no choice, but to fall prey to the usury of your new tax regime.”

In business, Confederation of Zimbabwe Retailers (CZR) president Denford Mutashu told NewsDay on Tuesday that suppliers and manufacturers had effected price increases of up 10% to offset the impact of the new tax.

Past president of the Confederation of Zimbabwe Industries (CZI), Busisa Moyo, said the new tax would lower margins by a third.

“While the two cents per dollar (2%) per transaction is good for lower income levels, it will destroy our margins. In the food sector, we work on 6% margins.

This is a 33% reduction in profits,” he said on his Twitter handle.

As the new tax regime is being challenged in court, ZCTU says it is taking to the streets to protest price hikes triggered by the new tax regime.

“We will not allow them to play with our lives and we are calling all citizens to resist.

We are announcing dates of action soon,” ZCTU president Peter Mutasa said.

He said if government does not reverse its policy, demonstrations could start as early as tomorrow.

“Workers across the country have emphatically told us to take action.

So our secretariat has been working with our economists to see what these policies mean to the workers,” Mutasa said.

“It’s clear that they (new measures) destroy industry and wipe out our earnings.

We are, therefore, going to present a petition to government and we could be rolling out action by Friday if that policy is not reversed.

The two cents per dollar should go.”

MDC Alliance youth assembly leader Happymore Chidziva said they would join the demonstrations if ZCTU calls for action, as they were also affected.

Former Finance minister and Harare East legislator Tendai Biti said the 2% levy would be blocked by Parliament.

“The good news is no revenue proposals can become law without a Finance Act approved by Parliament.

So, all revenue measures are null and void until approved by Parliament. We will be waiting in Parliament,” Biti vowed.

Founder of #ThisFlag movement, Evan Mawarire, who has had several run-ins with the police because of his outspoken nature, called for action and accused government of stealing from the poor.

“I can’t believe you have done this again.

You have repeated exactly what you did to us in 2008.

You have gone and taken everything that we have,” Mawarire said.

“Today, you are telling us that the money that we deposited into our accounts are no longer US dollars but are now called RTGS [real time gross settlement].

You are saying you are taking two cents from every $1 transferred so that you can pay your debt, tell us what you used that money for?”

Meanwhile, Mutasa said the country’s economic challenges could only be solved by addressing social security issues as well as the political contestation which attracts market confidence.

Speaking at an Alpha Media Holdings Conversation which was co-hosted by the Zimbabwe Council of Churches under the theme Towards a National Vision, Mutasa said the country’s challenges had everything to do with political issues and not the economy.

“We have tried all these other ways, but we have not achieved anything.

The issue about Zimbabwe is a political question.

For as long as people are not comfortable and people are not honest, then we are not going to do much in terms of social development.

What Zimbabwe currently needs is a political settlement,” he said.

Mutasa said the current government lacked international confidence and chances that it would turn around the economy were slim until the political question was resolved.

Economist Gift Mugano said the President Emmerson Mnangagwa administration had failed to provide solutions to the country’s challenges and, instead, they piled “misery on poor people”.

Another economist, Vince Musewe, who is now an adviser to Information minister Monica Mutsvangwa, said the country needed a “shared vision” to move forward and was hopeful that under Mnangagwa, things would change.

3 Comments

  1. We are in full support

    There will be a lot of people and businesses that aagreedre in full support of the law suite as well as any actions to try have them reverse. What the government is doing with our hard earned US$ and changing them into rtgs bond is tantamount to fraud and is theft

    If IMF or World Bank or any other international instituiton could invstigate this because where else are the people of Zimbabwe meant to report these issues? The very people who are trying to pull it off? And they are allmjust full of lies and deciet so how can anyone trust what comes out their mouths?

  2. Zanu pf now fundraising for 2023. Truckloads of campaign material and rice needed. Learning from Mugabe. Grace used to be accompanied by truckloads of rice where ever she went. Now she cannot afford to fly out for teatment. They milk the povo dry.

  3. Zanu pf now fundraising for 2023. Truckloads of campaign material and rice needed. Learning from Mugabe. Grace used to be accompanied by truckloads of rice where ever she went. Now she cannot afford to fly out for teatment. They milk the povo dry.

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