2pc transaction tax funding development

Source: 2pc transaction tax funding development | The Herald January 7, 2019

Prof Mthuli Ncube

Africa Moyo Senior Business Reporter
Finance and Economic Development Minister Professor Mthuli Ncube says the 2 percent intermediated money transfer tax has started bearing fruit, with the money collected so far set to go towards recruitment of primary and second school teachers and a host of other developmental projects.

Between December 1 and 26 last year alone, Government collected $572,40 million through the 2 percent tax, exceeding the monthly target by $129,1 million.

In line with its thrust to create jobs for citizens, Government recently indicated that it was employing 3 000 teachers to improve the teacher to pupil ratio, and also enhance the quality of education.

Further, Government is recruiting 351 new teaching and non-teaching staff for universities and 167 staff members for the Midlands State University (MSU).

Due to financial constraints, many institutions of higher learning were failing to recruit more staff, leading to deteriorating services.

All the employees are set to be paid through proceeds from the 2 percent tax, as Government tries to avoid unnecessary borrowing so as to reduce both internal and external debt.

Prof Ncube told The Herald Business last Friday that the tax was doing well and would go a long way in helping Government to fund its operations.

“The 2 percent transaction tax initiated in October 2018 has started bearing positive results on the economy,” said Prof Ncube.

“So it has helped us on at least four things, which include the expenditure on the recruitment of 3 000 additional teachers; the recruitment of 350 plus university personnel, then also the issue of devolution.

“The $310 million (announced in the 2019 Budget) for devolution is going to be covered by the 2 percent tax and yesterday (last Thursday), I was in Kanyemba and we know that the Kanyemba area alone is going to be given $2 million out of the $310 million for that purpose.”

Government has already granted national project status to the development of Kanyemba in Mbire District, Mashonaland Central Province.

Kanyemba, a large swathe of land in the northernmost part of Zimbabwe along the Zambezi River on the border with Zambia and Mozambique, also wants to achieve town status in the next five years.

Vice President Constantino Chiwenga, who has led several delegations to Kanyemba in the recent past including last week to explore development opportunities, says a greenbelt can be created in the area.

There are good soils that are suitable for the growing of a range of crops such as avocados, maize, cow peas and sugar beans.

Prof Ncube also said proceeds from the 2 percent tax would be channelled towards the critical education and health sectors.

“All those monies from the 2 percent tax will also go towards that; devolution and the social sector. And then by being able to cover those areas, we are able to run what we call a primary surplus on the Budget front,” said Prof Ncube.

Simply put “primary budget surplus” means that tax revenues exceed programme spending.