Dickson Mangena, Business Reporter
RETAILERS have said Government has the right to tax its citizens if it intends to raise revenue but the latest 15 percent Value Added Tax, which has since been reversed, was ill-timed.
Last week Government reversed the implementation of Statutory Instrument 20 of 2017, which imposed a 15 percent VAT on basic consumer goods to pave way for further consultations.
Businesses and suppliers had taken advantage of the new tax regime to increase prices by margins of up to 40 percent, sparking public outcry.
The suspended tax was proposed in the 2017 national budget and had been imposed on rice, margarine, cereals, maheu, potatoes, meat (pork, beef, fish and chicken).
In an interview, Confederation of Zimbabwe Retailers (CZR) president Mr Denford Mutashu said the latest tax faced resistance because the economy was not preforming well.
“The Government had the right to reintroduce VAT on any products as it is a way of raising money. In fact, these products used to attract the same VAT in the past and Government was just reinstating it. However, the timing was not right as people have low disposable incomes and demand was still low,” said Mr Mutashu.
He said the reasons the tax was initially stopped have not been addressed hence Government needed to to address the demand side.
“The effect was that prices had gone up for consumers by the same margin of 15 percent which is only being felt by consumers. What Government should have done was to ensure that they stimulate demand for the products. One of the way is that Government can make the importation of raw materials more easier than it currently is so that manufacturers can be cushioned some of the the tax,” said Mr Mutashu.
Consumer Council of Zimbabwe Matabeleland regional manager Mr Comfort Muchekeza said Government reconsidered the new tax after realising that the only affected were the poor who are the majority of the consumers of the goods.
“It is a welcome move that Government has reversed SI 20 of 2017 which was likely to raise the cost of living for Zimbabweans who have low incomes,” said Mr Muchekeza.
He said that the Government had the right to tax its citizens but said the environment was not conducive.
“We believe the Government has the right to tax its citizens as it is a way to also service those citizens. However, in this case the Government would be making life more difficult as most people don’t have money and need as much price cuts as they can,” said Mr Muchekeza.