Govt raids stock market

HARARE - A desperate Zimbabwe government, hard-pressed for cash, has raided the Zimbabwe Stock Exchange (ZSE) demanding Value Added Tax (VAT) on all brokerage incomes received on the bourse since 2004, a move that analysts say gives a graphic illustration of the Mugabe administration’s "pol

icy deficiencies.”
The intelligence-led swoop on the ZSE, accused by government of failing to remit VAT for two years, was expected to raise a Z$15 trillion windfall for government.
Official sources said the raid was the brainchild of the recently formed shadowy Cuban-style Zimbabwe National Security Council (ZNSC), chaired by President Mugabe and made up of the Central Intelligence Organisation (CIO) and the Joint Operations Command.
It is believed government is attempting to raise cash to bankroll the recent hefty salary increase for civil servants, grain and electricity imports.
President Mugabe’s administration has in recent months sustained its expenditure by printing money, a move that has fuelled Zimbabwe’s stratospheric inflation, the highest in the world according to the IMF.
Striking stockbrokers vowed they would not comply with the new tax-regime because they were given earlier assurances by government that the tax would not apply to them.
This is not the first time that there has been a tax deadlock on the bourse between stockbrokers and government.  Last year, stock market dealers faced-off with government over a capital gains tax that was introduced by Finance minister Hebert Murerwa during the 2006 national budget.
Authorities were later forced into a major policy climb down after a two-week lull on the ZSE, making concessions that eventually pushed through a withholding tax on dividends of 15% per individual shareholder, deducted at source.
It is understood that army general Constantine Chiwenga joined the negotiations last last week, although it was not clear whether he had entered the fray as a broker or an interested party. Mugabe recently assigned him to oversee the quasi-government tax collector ZimRA amid allegations of embezzlement and corruption by top taxmen.
ZSE CEO Emmanuel Manyuke and ZimRA director general Gershom Pasi would not comment.
The ZSE is one of the few remaining sectors of the Zimbabwe economy that is still working following years of skewed economic policies by government that have led to sustained negative economic growth over the past six years. – CAJ News

Post published in: Economy

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