Farmers push for tobacco tax reversal

Farmers push for tobacco tax reversal

Source: Farmers push for tobacco tax reversal – NewsDay Zimbabwe April 4, 2017

Farmers’ associations have engaged the government to reverse its decision to impose a 10% withholding tax on tobacco farmers without valid tax clearance certificates.

BY FIDELITY MHLANGA

Zimbabwe Tobacco Association (ZTA) chief executive, Rodney Ambrose, yesterday told NewsDay the tax was retrogressive for tobacco production and he has lodged a complaint with the Finance ministry through TIMB.

“Our biggest concern is that this 10% tax is very damaging for farmers. We are making a step to engage the government to have the tax reversed. We are engaging ministry of Finance through our regulator TIMB. Submissions were put on Friday,” he said.

Ambrose said farmers’ associations held a meeting on Friday in which they drafted a letter complaining about the immediate implementation of the tax by the Zimra without any formal consultations.

“Grower viability has been greatly eroded over the past three seasons and this tax will further negatively impact on growers returns.
The 10%, for many farmers is their profit margin. The tax will negatively impact on the production of tobacco, thereby, reducing foreign currency earnings to the country and a reduction in employment,” read part of the letter.

The Zimbabwe Revenue Authority (Zimra) last week advised Tobacco Industry Marketing Board (TIMB) that it was introducing the tax. Zimra said TIMB should withhold 10% from farmers without tax clearance certificates. Zimra said TIMB should remit the amount withheld on or before the 10th of each month.

Farmers’ associations pushing for the reversal of the tax, apart from ZTA, are the Zimbabwe Commercial Farmers Union, Zimbabwe Farmers Union and Zimbabwe National Farmers Union.

The tax, according to farmers, will further burden the grower, who faces high input, labour and finance costs and other taxes, levies and makes tobacco growing uncompetitive.

The new tax comes as farmers face an afforestation levy, stop order fees and auctions commissions among others.

Farmers are also obliged to pay $100 registration fee to TIMB.

Farmers’ unions say the tax negates the various incentives that the government and Reserve Bank of Zimbabwe have put in place to incentivise tobacco growers through a 5% export incentive scheme and reducing the costs of doing business.

A survey done by NewsDay yesterday at the three tobacco auction floors revealed the new tax was yet to come into effect, with most farmers professing ignorance about the impending tax.

“I am not aware of the new tax. We are not going to accept that tax. But, we as farmers, we are always downtrodden. Already, we are being taxed and yet we also can’t access our money. Look, since last Wednesday, I am here and I can’t access my cash,” Godfrey Mubaiwa, a farmer from Mt Darwin, said.

TIMB chief executive officer, Andrew Matibiri, said the matter was being “handled by the responsible authorities”.

Tobacco is one of the country’s largest foreign currency earners, raking in nearly $1 billion last year. Output is expected to reach 205 million kilogrammes this year from 202 million kilogrammes realised in 2016.

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