THE Confederation of Zimbabwe Industries (CZI) has accepted the modified 2% tax on electronic payments introduced by government through the minister of Finance and Economic Development Professor Mthuli Ncube but urged the authorities to allow them to reflect the measure in their pricing.
In a statement CZI president Sifelani Jabangwe said the 2% tax while necessary to address the fiscal imbalance should not go beyond December 2019.
“The 2% tax, as subsequently modified by the Minister of Finance on 5 October, with further adjustments in consultation with the private sector, should go a long way towards closing the fiscal deficit and restoring stability to the economy.
We therefore recognise the necessity of this tax as a short term shock therapy measure. The alternative is to have incomes further eroded by run-away inflation, increased shortages and a general decline in well-being. We therefore call on all stakeholders to accept this painful necessity to stabilise the economy.
We must point out that this tax is not sustainable over any extended period of time as it taxes each stage of the value chain and negatively affects the growth and competitiveness of value chains.
We propose that the tax expires by December 2019 at which point we expect that Government would have adjusted its expenditure mix to match collections and more targeted ways of broadening the tax base will have been developed”.
Since introduction of the 2% tax, the market has witnessed increase of basic commodities prices and a sharp increase of rates for the US$ on the parallel market.
Jabangwe further said industry guaranteed the supply of basic commodities, as long as adequate supply of official foreign exchange is made available by the Reserve Bank of Zimbabwe (RBZ).
However, CZI urged government to hold its end of the bargain by implementing measures outlined in the Transitional Stabilization Programme (TSP) to reduce the fiscal deficit.
“We recognise that any turnaround measures should start by addressing the fiscal deficit. We welcome the following measures as highlighted in the Transitional Stabilisation Programme and implore government to implement these immediately.
Government has come up with a sound fiscal adjustment programme. In order to give the market confidence that the programme shall be implemented successfully, government must publish relevant data timeously.
Given the critically low confidence levels in the economy we recommend the publication of the above start as soon as possible”.
Among the measures government undertook to implement in the TSP are expenditure reduction through measures including right sizing public employment; cutting travel expenses; reducing fuel benefits; and curtailing vehicle acquisition.
Other measures include Issuing Treasury Bills through market based auctions, and limiting new release to the minimum required for fiscal purposes,limiting the over-draft with the Reserve Bank to the Statutory level permitted by law and accelerating the restructuring and privatisation of state owned enterprises.
Jabengwe said in future government must consult stakeholders before introducing new measures to ensure inclusivity.