Letwin Mubonesi
Captains of industry and commerce proposed that Treasury should scrap or lower the controversial 2% intermediated money transfer tax (IMTT) imposed last year by Finance and development minister Mthuli Ncube.
They argued that it was an unmanageable additional cost to their already struggling companies.
This came out after numerous bodies representing industry and commerce showed up on Budget and Finance Portifolio Committee as part of the 2020 budget consultations chaired by Honorable Felix Mhona.
They were of the view that government should stop funding the Command Agriculture programme because it was fuelling broad money supply and driving the economy into hyperinflation.
The US$2, 8 billion that government used to support Command Agriculture Programme has since been considered as unauthorised expenditure after it was allocated without Parliament approval and the minister of Finance and Development is yet to come before Parliament to explain on this.
Command Agriculture has all along been supported by government through issuance of Treasury Bills (TBs), which is basically printing of money that government does not have. It is alleged that between 2017 and 2018, around US$2, 8 billion was issued to Sakunda Holdings, owned by Kudakwashe Tagwirei to head the Command Agriculture programme.
Zimbabwe National Chamber of Commerce (ZNCC) Chief Executive Officer Christopher Mugaga said, “The impact of the Command Agriculture programme has been to crowd out activities in the market, and we think that the Presidential Input Scheme should be the one funded through the budget. Command Agriculture should be a specialised activity funded by banks. It is non-performing loans and at the end government incurred expenditure and so Command Agriculture must not be on the budget figures.”
While commenting on the 2% tax, Mugaga argued that it has been a serious cost to business.
“Running a budget surplus on the 2% transaction tax has always been high for us as business and we need to engage (Zimbabwe Revenue Authority) and the Finance ministry so that they either remove it or reduce it to 1% because of its cost to business. If I send money to my mother today, it is taxed and it is too much. The 2% (tax) is a major cost to business and you cannot celebrate a budget surplus driven by this when business is being lost through it and there is no cost benefit to it,” he said.
ZNCC president Tamuka Macheka reiterated in saying the problem in Zimbabwe was that the policy environment was very unfavourable.
“The policy environment is so unfriendly that the 2020 budget submissions will not be efficient as long as the policies are unfriendly and inconsistent,” he said.
Bankers’ Association of Zimbabwe (BAZ) president Mr Webster Rusere also said there was need to give time for implementation of newly-announced policies, for instance when the 2% tax was announced, bankers were not given time to factor in system changes to implement it.
The High Court recently ruled that the 2% tax was illegal, but the court verdict switched into a national debate as government has now enacted enabling laws to support it.
Chamber of Mines chief executive officer Isaac Kwesi also said the macro-economic challenges facing the nation had not spared the sector, especially electricity and water challenges, resulting in a decline in mining output from 10% to 45% in August compared to the same period last year.
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