Source: Treasury sinks $400m into social services, infrastructure | The Sunday Mail May 19, 2019
More than 74 percent of the money raised so far through the Intermediated Money Transfer Tax (IMTT), or the 2 percent tax, has been channelled towards infrastructure projects, health, education and social safety nets in line with Government’s commitment to ringfence the resources for social services.
The IMTT was introduced in October last year.
Latest official statistics from the Ministry of Finance and Economic Development indicate that of the $541 million that has been raised since October last year, $270 million has been used to fund health care and the Basic Education Assistance Module (Beam) – a facility specifically designed to provide quality education to orphans and vulnerable children.
An additional $129 million was channelled towards road construction, water and sanitation projects.Also, $100 million was used to finance both relief and recovery efforts in areas that were affected by Cyclone Idai, particularly in Manicaland, while $42 million has been reserved for devolution. In a statement to The Sunday Mail, Treasury indicated that IMTT has helped Government bankroll major infrastructure projects and cut the budget deficit.
“Intermediated Money Transfer Tax (IMTT), popularly referred to as 2 percent tax, has enabled Government to attend to the Cyclone Idai disaster and critical infrastructural work without resorting to borrowing.
“The 2 percent tax has helped us to cut the deficit, invest in vital infrastructure, and put aside a sizeable sum that is being used to mitigate the effects of Cyclone Idai,” the statement read in part.
“The tax has also allowed us to pay for health care and basic education.
“In the past, this would have meant further Government borrowing, leading to extra debt and long-term economic ramifications. But fortunately, funds from the 2 percent tax were put aside for exactly this eventuality, and became available exactly when they were most needed.”
Monthly revenues from the tax head are presently exceeding more than $50 million per month.
Economist Dr Gift Mugano said IMTT is a “painful necessity” that is progressively stabilising the economy.
“Although it is painful, it is very crucial, especially to correct the wrong that was in the economy.
“What the tax is doing is to stabilise the economy, like creating surplus where there was a deficit,” said Dr Mugano.
“After stabilisation, there is going to be recovery of the economy and this is the purpose of this tax.
“Naturally, no one wants to pay extra tax, however, at times we have to go through pain in order to achieve desirable results,” he said.
Government has already started rehabilitating roads, schools, clinics and bridges in areas that were affected by the recent tropical cyclone.
It also continues to finance the 2019 Infrastructure Investment Plan, through which 781 kilometres of road network will be upgraded and 483 kilometres regravelled this year.