2% tax challenge, judgment reserved

BY CHARLES LAITON

High Court judge Justice Happius Zhou has reserved judgment in an application filed by pro-democracy activist Mfundo Mlilo, seeking an order to suspend the 2% electronic transactions tax introduced by Finance minister Mthuli Ncube late last year.

Ncube introduced the new tax in his Transitional Stabilisation Programme, which resulted in the skyrocketing of prices of both goods and services, as the market forces responded to the new measures.

Justice Zhou’s decision followed submissions by Mlilo’s lawyer, Tendai Biti and the government’s representatives on Tuesday.

In his application, Mlilo said Ncube’s decision was made without the necessary backing of the law, in particular the amendment of the Income Tax Act or the regulation of the tax in a Statutory Instrument.

Mlilo further said Ncube’s imposition of the tax was illegal and unconstitutional, adding that he “usurped Parliament’s powers by pretending to amend a law and promulgating a fresh law, which is too wide and in contravention of the Constitution”.

The activist also said Ncube had on October 12, 2018 belatedly enacted the Finance (Rate and Incidence of Intermediated Monetary Transfer Tax) Regulations Statutory Instrument (SI205/2018), in which he sought to legalise and actualise his announcement done on October 1, 2018, adding that the statutory instrument still remained unconstitutional and a nullity.

Mlilo also said in terms of the country’s laws, a minister cannot amend an Act of Parliament.

“What the respondent (Ncube) seeks to do in the regulations, is to pretend that he is Parliament and, therefore, to amend an Act of Parliament. This, he cannot do. Parliament is the only legitimate law-making body in Zimbabwe in terms of Section 134 of the Constitution; such power cannot be delegated to any other person,” Mlilo said.

Mlilo called for the immediate suspension of the Finance (Rate and Incidence of Intermediated Money Transfer Tax) Regulations published in SI205/2018 and the suspension of the decision taken by Ncube, to review the intermediate money transfer tax, which was initially pegged at five cents per transaction.

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