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Finance Minister Patrick Chinamasa presents the 2014 Mid-Term Fiscal Policy Review Statement in Parliament yesterday

Zimbabwe once again finds itself facing mounting economic challenges that Government is evidently battling to resolve. However, only collective effort will make the challenges surmountable.
Finance Minister Patrick Chinamasa is a man with a very unenviable job right now in that the minister must balance competing needs, some of which may not be overlooked or set aside.

It is against this background that the minister may from time to time have to prescribe some painful measures to deal with the challenges, which may sometimes be unpopular with people, but require responsible behaviour by every Zimbabwean who loves his/her country.

One of these measures is the increase in excise duty on fuel, which is meant to raise additional revenue for Government programmes. Tax revenue inflows have been affected by poor economic performance, which has also constrained companies’ viability and capacity to pay tax to the Government.
Excise duty on diesel and petrol is currently pegged at 25 and 30 cents per litre, respectively, but this is set to change.

To raise the additional revenue to finance inescapable expenditures, the Finance Minister proposed to increase excise duty on diesel and petrol to 30 cents and 35 cents per litre, respectively, with effect from September 15, 2014.

The measures announced by Minister Chinamasa when he presented the Mid-term Fiscal Policy Review statement yesterday will take effect from today.
Obviously, this will jerk business organisations, individuals and all entities that handle income and expenditure to support operations, as the increase in fuel cost may drive other expenses.

But it must be acknowledged that regardless of dwindling tax revenue inflows, Government must still pay its workers and meet other key and strategic social service obligations such as the efficient delivery of health and education services.

Government must still find ways to raise funding, domestically of course, in order to meet its listless obligations.
While businesses must surely adjust costs in line with the cost structures to sustain their activities, it must be said from the outset that some do it with reckless abandon.

This sort of mentality, carried over from pre-dollarisation in 2009, has the potential to further complicate efforts being pursued by Government to turnaround the economy.

As such, it is only in the best interest of every Zimbabwean who feels obligated to play some role in that endeavour as we will all either swim or sink together in our quest for prosperity. While Minister Chinamasa has reviewed excise duty for revenue purposes, adjustment to the cost of any commodity affected by the increase must be done proportionate to this move. Rightly so, the increase of 5 cents per litre cannot be justified where a commodity’s price, tariff or fare is subsequently increased by a factor of say 50 percent or 100 percent.

This is because apart from the fuel cost component of a business or organisation, there are other cost builders considered before one settles on the appropriate price to charge.

Any irrational price increases will only serve to increase inflationary pressures in a dollarised environment where liquidity is one of the biggest challenges confronting the country. Ultimately, such irresponsible behaviour will create a vicious cycle that will come back to hound every citizen of this country, to which all must contribute the building blocks.

At a time when the viability of companies is under immense pressure, limiting their capacity to pay living wages, irrational price increases will worsen the already delicate situation.