FINANCE and Economic Development Minister Professor Mthuli Ncube yesterday brought relief to motor vehicle importers, mining entities and other exporters when he announced a raft of tax payment measures that are expected to boost domestic use of local currency.
Prof Ncube said this in a public advisory on measures adopted by the Government to promote the domestic use of the Zimbabwe dollar.
In his advisory, Prof Ncube said all mining royalties were now payable in Zimbabwe dollars up to a limit of 50 percent of royalties due.
All duties and taxes on the importation of designated motor vehicles are now payable in Zimbabwe dollars again up to a limit of 50 percent of duties and taxes payable.
Prof Ncube indicated that all domestic taxes due from exporters on their export receipts are now payable in both foreign and local currency in direct proportion to the approved export retention levels.
As an example, an exporter who receives foreign currency of US$1 000 at a 40 percent surrender ratio (60 percent retention) will pay taxes on the 40 percent in Zimbabwe dollars and the 60 percent in foreign currency.
Economic analyst, Mr Persistence Gwanyanya welcomed the move saying it was the best way for the Government to prop the Zimbabwe dollar if it collects its revenue in local currency.
He added that it would come as a relief to exporters who have been paying their taxes in foreign currency.
“What Treasury has done is a response to calls that have been made by the Central Bank.
“Exporters that have been liquidating 40 percent of their proceeds at the interbank rate will now use that money to pay their taxes and duties,” he said.
Mabvuku resident, John Tinarwo said he welcomed the decision to levy part of the duty for importing cars in local currency.
“It’s the right thing to do for duties for vehicles to be levied in local currency. I wish it had been pegged at 100 but all the same, it’s a step in the right direction.”
Another Harare resident, Sekai Nzombe echoed similar sentiments saying the only way to sustain the local currency was to have it widely used in paying for Government services.
In his advisory notice, Prof Ncube said the ultimate aim of the new set of measures is to promote the use of local currency.
“These measures reflect the Government’s commitment to promote the wider use of the Zimbabwe Dollar and to continuously strengthen the economy to build long-lasting macro-economic stability,” he said.
Prof Ncube said the Government, through various agencies, was presently seized with instituting measures to enhance the formal use of the domestic currency and stemming illegal trade in foreign currency and its associated twin; that of parallel market benchmarking or indexation of prices on goods and services.
The benchmarking of prices on the parallel market rate has significantly contributed to price instability in the economy, imposed downside risks to macro-economic stability, and also eroded domestic and international competitiveness.
“Over the past 40 months, the government has instituted numerous initiatives to bring macro- economic stability.
“These include fiscal consolidation which has resulted in balanced budget performance and the elimination of destabilising fiscal deficits despite major economic shocks such as the 2019-20 droughts, Cyclone Idai, and the ongoing threat of the Covid-19 pandemic.
“Furthermore, the restoration of domestic and export competitiveness through the reintroduction of the Zimbabwe dollar, has seen rapid gains being made in stabilising the current account, which has also been boosted by increased international remittances, enhanced export performance, and notable import substitution effects.”