CLOSE X
Advertisement

New Zim taxes 'self-defeating'

Economy
President Robert Mugabe’s cash-strapped government is going for broke – in one week alone, it introduced new taxes targeting airtime vendors, struggling micro-enterprises, small-scale tobacco farmers, motorists and commuter minibus owners.

Analysts slated the move describing it as akin to “killing the goose that lays the golden eggs”.

The development comes amid growing fears that the economy may soon hit the disastrous lows of 2008 as the country’s surrogate currency – the bond notes – continue to lose value against the US dollar, with the coveted greenback now almost completely unavailable on the open market.

Share this story
A customer in a butchery in Mbare township in Harare. Zimbabwe started levying a 15% value-added tax on basic foodstuffs on February 1, dealing a further blow to cash-strapped consumers. Picture: AFP

“This government has become a monster that not only wants to wring every cent from its citizens, but is also eating them alive,” said Tapiwa, a hairdresser in Harare .

The new taxes, promulgated last week, took effect from January 1, 2017.

“Operators of hairdressing salons are to pay $10 per chair per month while informal cross-border traders will pay 10% of the value for duty purposes of the commercial goods being imported.

“Operators of omnibuses for carriage of passengers will be required to pay $45 while those of between 25 and 36 passengers will part with $70 a month,” reads the Government gazette.

The harsh economic environment has pushed millions of people into the informal sector following company closures and retrenchments.

The new taxes will also affect driving schools with those offering passenger licences being required to pay $100 a month per vehicle. Heavy vehicle driving schools will pay $130 per vehicle a month. Operators of taxi cabs will pay $25 per month for each cab operated.

Economic experts said the raft of new taxes were to a large extent “self-defeating”.

Read also: Heavy rains damage Zimbabwe's infrastructure

“Such a far-reaching taxation system discourages investment because a number of startups and entrepreneurs are not yet in a position to pay so many taxes,” economist Primrose Ncube said.

Political analysts also warned that the government was now skating on thin ice as its tax regime was “testing” the patience of overburdened ordinary citizens.

“This overtaxing of the people could be the last straw before an open revolution erupts. In the US, it was a revolt against unjust taxes that triggered the revolution, and many revolutions have been borne out of the rejection of unjust taxes,” political analyst Dewa Mavhinga said.

National Transport Workers' Union of Zimbabwe president Noah Gwande said the new taxes for commuter operators was retrogressive as commuter operators were already paying other taxes. He said commuter omnibus operators parted with more than $20 a day in paying fines to the police at roadblocks around the city.

Commuter operators also pay tollgate fees and every three months they pay Road Motor Service and Zimbabwe National Roads Administration taxes, in addition to passenger insurance.

“The tax is unfair and retrogressive; trying to collect tax where there is no income,” he said.

“Taxing the little income the owner makes will result in the cost being passed on to the passengers.”

Gwande said it was unfair for the government to introduce taxes to finance its wage bill.

“Taking money from the poor to pay the civil servants’ wage bill doesn’t make sense,” he said.

George Mushipe, spokesperson of the Apex Council – the umbrella union for civil servants – said the new taxes would worsen the plight of the country’s toiling masses.

“Civil servants are overtaxed already and our disposable income continues to shrink. Yes, they (the government) must raise revenue for the state, but they should put a human face on this, especially in the light of the prevailing economic environment,” he said.

Tax experts also said there was no guarantee that the government would use the new taxes to grow the country’s dying economy.

“Increasing revenue collection does not guarantee a better life for the poor. In Zimbabwe, public expenditure on health over the years has been well below the Abuja commitment for African governments,” said Cephas Makunike, an executive with Tax Justice Network Africa.

Last week, the Zimbabwe Revenue Authority (Zimra) ordered the Tobacco Industry and Marketing Board to withhold 10% of gross sales from every farmer who did not have a valid tax clearance certificate.

Thursday’s directive, which was unexpected, angered farmers.

“It’s not fair on the part of tobacco farmers. Why not other crops? This will add to the burden on farmers in paying rents and debts,” said the Zimbabwe Tobacco Association’s agricultural manager, Casper Mlambo.

One rural farmer said: “We view this as a desperate attempt to raise money by the government to pay civil servants the bonuses it promised them.”

But Zimra board chairperson Willia Bonyongwe said the taxes were not new; the tax collector had just broadened the tax base.

“It was there before for people in small-scale business, and it is true that at the end of the day these small businesses get more money than teachers who are being taxed,” she said.

AFRICAN INDEPENDENT

Share this story
Advertisement
X