Review of two percent tax

Government will review the two percent transactional tax on electronic money transfers to make it sensitive to the needs of both business and consumers, President Emmerson Mnangagwa has said.

The Head of State and Government said a new law was being drafted to deal with “unexplained wealth and deposits” after which new tax measures would be announced.

In his weekly column in The Sunday Mail, President Mnangagwa said his Government would always listen to business.

“Government took to heart the cry that the two percent transactional tax has compounded the tax burden for both business and for the consumer.

“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,” said President Mnangagwa.

To ensure greater cohesion, a local business advisory body made up of representatives seconded from industry is being created.

Further, an international advisory body will be formed to keep the President “keyed on international business and investment issues”.

“To narrow the communication gap, I have embraced the idea of a Business Council to advise me and Government. At the Monday meeting (with business representatives at State House, Harare), I requested that business forward names so that such an advisory body is urgently constituted.

“Because we operate in the global market, I have also decided to create another advisory body comprising international experts who will keep me keyed on international business and investment issues.

“The catchment for such a team will be global, both geographically and by way of the range of experience. Zimbabwe must improve her international appeal for FDI,” said the President.

President Mnangagwa said his Government would not consider policies that eroded wealth, wages, savings and pensions.

“A key consideration of both monetary and fiscal policy must be to secure the values of wealth, earnings, wages and savings in the economy. We should never make or allow decisions that erode value, as happened in 2008. On this one matter we stand firm and unmoved. No policy will be entertained whose net effect is to undermine value in the economy.”

Indications are that some of the measures President Mnangagwa is speaking of will be captured in the 2019 National Budget that will likely be presented in late November.

Finance and Economic Development Minister Professor Mthuli Ncube has said he is simplifying the tax structure and coming up with incentives for SMEs to contribute to the fiscus.

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  • Vuramavi

    Can I make a suggestion with regards to currency reforms? Can we keep the multi-currency system in place, temporarily make the South African Rand the major currency for transaction, then work towards introducing a new gold, silver and PGM backed local currency based on these base metals?

    Instead of charging a 10% levy on minerals mined, the RBZ can collect 7% of gold, silver and PGM metals as bars, or coins, store them in a vault in the RBZ, print money (or introduce a digital gold currency) which will be the equivalent of the gold, silver and PGM metals in the vault. Regular audits by external independent agencies will confirm the value of these metals.

    If gold and silver exports are expected to pull in US$1.6 billion this year, with PGM exports also projected to rake in just over US$600 the 7% I’ve proposed would translate to US$154 million. No need for Afrexim bank backing. The money printed against the value of metals in the vault will be introduced in the money system as loans to highly productive sectors as part of the reindustrialisation drive. With increased exports of the gold, silver & PGM’s each year, the money supply in our system can be gradually increased until we wean ourselves off the US$. It’s just an idea.