HARARE – President Emmerson Mnangagwa’s recent announcement that he will review the two cents per dollar transaction tax is a welcome relief to long-suffering Zimbabweans.
The new tax regime introduced by Finance minister Mthuli Ncube last month had been totally rejected by both business and consumers but government went ahead with the promulgation.
Shortly after Ncube’s announcement, prices of basic commodities started to skyrocket while some other traders began to ask exclusively for United States dollars. Panic gripped Zimbabweans as they started to hoard basic commodities afraid of returning to the darks days of hyperinflation in 2008.
The bond note’s value against the US dollar drastically fell on the parallel market creating further chaos in the economy.
Those on prescription medicines were greatly affected as well with pharmacies and other health service providers also demanding US dollars while totally rejecting the bond notes or electronic transfers. Civil society groups had also approached the courts seeking to have the tax repelled but the case was deemed not urgent.
Writing in his weekly column in the State media at the weekend, Mnangagwa acknowledged the fact that there was need to look again at the controversial two cents per dollar tax.
“Government took to heart the cry that the two percent transactional tax has compounded the tax burden for both business and for the consumer,” Mnangagwa wrote.
“Once the legal instrument we are crafting against unexplained wealth and deposits is in place, new measures will be announced to review the tax which, among other considerations, had been occasioned by illicit activities in the financial services sector.”
At the introduction of this tax, business, consumers, manufacturers and the general public bemoaned that they had not been consulted.
Government just rushed to implement the tariff without having deliberated fully with all affected stakeholders. A proper consultation would have avoided all the chaos that followed the introduction of the tax.
Hopefully, this time around, Mnangagwa and his government will discuss the new measures with all relevant stakeholders before they announce the reviews. At the moment, Zimbabwe’s economy is in a precarious state which needs government to work closely with industry and consumers.
Zimbabweans are heavily taxed while government’s expenditure is not showing any signs of slowing down. Mnangagwa’s review must go a long way in cushioning the general public that has already suffered due to the chaos created by Ncube’s tax.