HARARE Cash-strapped Zimbabwe is unlikely to be in a hurry to implement a proposed ban on second-hand vehicle imports such a move will likely inflict the proverbial sucker punch to the new Harare administration which is literally living from hand to mouth. (Pictured: Used cars from Japan that Muagbe has proposed banning from Zimbabwe.)President Robert Mugabe announced last week that the new power-sharing regime in Harare was contemplating a ban on imports of second-hand cars and the use of retreaded tyres on public transport vehicles as part of measures to curb road carnage. He said his government was concerned about the high incidents of fatal road accidents, which have claimed more than 80 lives since the end of July and mostly involved buses.
But analysts warned last week that outlawing imports of used motor vehicles would be ill-advised under Zimbabwes present circumstances marked by low donor support for the countrys economic programmes. This will be another classic case of killing the goose that lays the golden egg because duty on imported vehicles currently constitutes a large proportion of government revenue at present, observed an analyst with a Harare-based stockbroking firm.
According to the 2009 mid-year fiscal review presented by Finance Minister Tendai Biti in July, customs duty accounted for about 32 percent of the US$285 million revenue collected between January and June this year. It was second only to Value Added Tax collections which contributed a significant 39 percent of total revenue during the same period.
Duty on imported vehicles makes up a large proportion of the customs duty collections by the Zimbabwe Revenue Authority.
Banning imports of second-hand vehicles would, therefore, significantly reduce one of the governments cash-cows at a time it is desperately looking for funds to meet salaries of civil servants and other recurrent expenses.
Corporate tax income accounted for an insignificant 2.4 percent of total revenue against a target of US$32.6 million at the last fiscal stock-take in July, meaning the government does not have much room to play with regards to tampering with its income base.
Economic consultant John Robertson said banning used vehicle imports would be tantamount to interfering with the operations of free market economy. Why they would choose to ban the imports remains a mystery. If you leave the markets alone, the people in those markets will ultimately work out for themselves what is right for the market, Robertson said.
The analysts also questioned the timing of the planned ban, saying such a move would only make sense if it is implemented at a time when the domestic vehicle assembly industry has improved its capacity to supply the market.
The state-run Zimbabwe Broadcasting Corporation reported last month that the government-owned Willowvale Mazda Motor Industries (WMMI) was currently operating at about 20 percent of capacity due to funding constraints.
WMMI boss Dawson Mareya told the public broadcaster that conditions had not changed from last year, with the company unable to meet demand. Business has, however, been booming for importers and distributors of second-hand vehicles who have set shop through the major towns and cities.
ZIMRA sources said at least 20 imported second-hand vehicles are processed through the Beitbridge border post each day, with the revenue collector netting an average US$50 000 daily from duty paid. Used Japanese and Singaporean vehicles have a ready market in Zimbabwe.
Post published in: Economy