Govt increases taxes by 500%

By Gift Phiri
HARARE - Zimbabwe's bankrupt government has imposed a string of tax rises of at least 500 percent on imports, fuel, vehicles, bank transactions and postal consignments as it battles to stem the collapse of the country's tattered economy.
Finance Minister Hebert Murerwa announ


ced the increases as part of a supplementary budget, aimed at raising $372,2 trillion to bankroll service delivery costs for the remaining five months of the year.
Some of the money will help with food imports to feed some 3,3m people which the United Nations estimates are in need of food aid, wages for civil servants, and fuel imports.
Meanwhile, government also increased Automated Financial Transaction Tax from the current $500 to $5 000 per transaction. This means starting September 1, withdrawing cash from the ATM will cost about $100 000 given that there is already another $88 770 billed for “switch charges” and another $5 000 “government levy.”
Murerwa told Parliament that he was increasing Carbon Tax from the current $1 000 per litre of petrol or diesel to $5 000. The mode of payment for Carbon Tax was changed last year from a system where the tariff was levied according to engine capacity to a scheme based on fuel consumption.
Murerwa said government would also introduce a fine for taxis and commuter omnibuses that do not display their Presumptive Tax Clearance Certificate on their windscreens. Public transport buses pay a quarterly tax and VAT of 17.5 percent.
The Presumptive Tax was introduced during the 2005 mid-term fiscal policy ostensibly to “capture the informal sector into the tax base.”
The National Oil Company of Zimbabwe (NOCZIM) Debt Redemption Levy on diesel and petrol has also been increased to a shocking $25 000 per litre up from $110. Murerwa defended the hike in the NOCZIM levy saying the toll had been overtaken by inflation as it came into force when fuel prices were relatively low.
“There is thus need to review the amount to a meaningful level that will assist NOCZIM in amortizing the accumulated debt,” Murerwa said.
The state-run fuel procurement company has been run down by corruption and mismanagement and is currently saddled by heavy debts, arising from accumulated losses piled by years of subsidizing fuel.
Government also announced it was adjusting the tax-free threshold on incomes from $7 million to $20 million a month. Murerwa admitted inflation, currently pegged at 1184 percent, was eroding disposable earnings and affecting the livelihoods of millions of Zimbabweans.
ZCTU secretary general Wellington Chibebe said the adjustment was a far cry from the proposals the labour body tabled demanding tax-free income that was in tandem with the poverty datum line of $68 million per month.
“We are not fooled, we are actually agitated,” Chibebe said.
The “tax relief” will come into force in September at a time analysts project the poverty datum line to have breached $120 million, assuming that prices for the consumer basket increases by an average of $20 million per month as has become the pattern over the last five months.
The opposition Movement for Democratic Change (MDC) said the tax hikes would bring more suffering to Zimbabweans.
“What the minister has done is to tell us straight in the face that the government is broke and they are prepared to drive the economy to a fatal crash,” the MDC’s Tapiwa Mashakada said.

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