Hike in taxes on fuel, airtime •Move to boost revenue inflows •Non-essential imports to go

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

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

Happiness Zengeni Business Editor
TAX on petrol and diesel rises 5c a litre today, while a 5 percent excise duty will be imposed on airtime from Monday as Government introduces a raft of measures to enhance revenue to meet its expenditure obligations. With effect from today, excise duty on diesel and petrol will be increased to 30 and 35 cents per litre from 25 and 30 cents.

This will effectively result in an increase in the price of fuel.
Presenting his Mid-Term Review statement in Parliament yesterday, Finance and Economic Development Minister Patrick Chinamasa said such measures seek to enhance revenue, curb the influx of non-essential imports as well as strengthen tax administration.

He said the slowdown in gross domestic product growth, which has now been forecast at 3.1 percent from the initial 6,1 percent, had seen reduced revenue collections and depressed exports and imports.

Government revenues are now projected to be below the targeted $4,12 billion to $3,85 billion.
Expenditure is projected at $4,12 billion but could even be more as $3,2 billion will now be spent on employment costs against the initial estimate of $2,99 billion.

Minister Chinamasa said the wider deficit will be offset by interventions which include support for agriculture and the domestic industry, formalisation of business activities for tax purposes, parastatal reforms and the Debt Resolution Strategy.
The minister will also levy excise duty of 5 percent on air time for voice and data with effect from September 15. Customs duty at 25 percent on mobile handsets will be levied with effect from October 2014.

“Honourable Members would recall that Government reduced rates of customs duty on mobile handsets, with effect from 1 August 2009, in recognition of access to information as an essential tool to enhance decision making in the global village, and also to encourage the development of Information Communication Technology (ICT), in line with international trends.

“Handset purchases have increased significantly and mobile telephone penetration rates have also increased substantially to over 100 percent. Customs duty reduction has, thus, achieved its intended purpose.

“I, therefore, propose to levy customs duty on mobile handsets at a rate of 25 percent, with effect from 1 October 2014.”
Minister Chinamasa also reviewed duty on cooking oil, poultry, soap, maize meal, flour, beverages, dairy produce, furniture, sugar, fresh and canned fruits and vegetables, among others as the influx of imports, continues to undermine growth of the agricultural sector and recovery of the local industry.

The minister also proposed a tax on fringe benefits and will empower Zimra to collect assessed taxes directly from employees or board members, who are currently serving, have resigned or retired from the institutions.

Listen to the full statement here….

He noted that a number of organisations remunerate employees through fringe benefits which include cash and non-cash payments over and above their salaries and wages. Benefits range from the use of a company vehicle or accommodation, access to low interest loans and other subsidised or discounted goods and services, among others.

“We need to restore equity and fairness to those employees who do not receive fringe benefits and also enable the tax administration to fairly assess taxpayer liability, gross income includes any amount equal to the value of an advantage or benefit in respect of employment, service, office or other gainful occupation.

“Whereas the Income Tax Act obligates employers to deduct and remit PAYE to the Zimbabwe Revenue Authority, the trend that has been observed, especially in public enterprises, is that fringe benefits were not subjected to employees’ tax,” explained Chinamasa.
He also proposed six months tax amnesty on all taxpayers in respect of their tax obligations for the period February 1 to September 30 2014 with effect from October 1. “To facilitate disclosure, the whistle blower facility will be suspended during the Amnesty period.” He further said that no penalties and interest will accrue on the tax obligations within the period of amnesty.

Other revenue measures include an increase in property rentals and contributions from A2 beneficiaries of the land reform programme.
Interventions to the productive sector include the exemption of export tax for the sale of raw hides and skins for the period January to December 2014. In order to discourage minimum value addition through cut and trim, Minister Chinamasa proposed to levy customs duty on blankets imported as raw materials, with effect from 1 October 2014.

Furthermore, in line with the Zimbabwe Leather Sector Strategy (2012-2017), export tax of 15 percent will apply on exports of raw hides other than domesticated bovine animals such as goats and sheep, beyond the export quota.

Minister Chinamasa increased customs duty on single cabs (-1400kgs), double cab, buses (26 passengers and above) and passenger motor vehicles of engine capacity below 1500cc at rates between 40-60 percent.

Read the full statement here…..

Furthermore, Government Departments and parastatals will purchase motor vehicles from the local assembly plants in line with the Directive from the Office of the President and Cabinet issued through Circular Number 16 of 2011.

Meanwhile, Minister Chinamasa reviewed downwards the royalty on gold produced by primary producers to 5 percent from 7 percent while presumptive tax on small scale gold miners to 0 percent from the current 2 percent.

The Highlights

  • GDP growth for the year revised downwards from 6.1 percent to 3.1 percent
  • Excise duty on diesel and petrol increased to 30 and 35 cents per litre from 25 and 30 cents per litre, respectively, with effect from September 12, 2014.
  • Levy excise duty of 5 percent on air time for voice and data, with effect from September 15 2014.
  • Levy customs duty on mobile handsets at a rate of 25 percent, with effect from October 1, 2014.
  • Increase customs duty on the motor vehicles.
  •  Levy customs duty on blankets imported as raw materials, with effect from October 1 2014.
  • Review downwards, royalty on gold produced by primary producers from 7 to 5 percent.
  •  Duty structure on the cooking oil, poultry, soap, maize meal, flour, beverages, dairy produce, furniture, sugar, fresh and canned fruits and vegetables, among others, reviewed.
  • A2 beneficiaries of the land reform programme to contribute towards the cost of survey of the land allocated.
  • Government to ensure early accessibility to inputs and support for early planting.
  • Government setting aside resources in support of cloud seeding.
  • Government in collaboration with other key stakeholders such as input suppliers, financiers and farmers, putting in place various financing strategies in support of the 2014-15 agriculture season.
  • Government mobilising about $252.3 million in support of agriculture under the Presidential Inputs Scheme for the 2014/15 season.
  • Government to capacitate 1 600 000 Communal, Old Resettlement, Former Small Scale Purchase Areas and A1 Households to be self-sufficient in food.

Pin It
  • Gv

    Stop taxing us and reduce the size of the government.

  • Boardhouse

    Zvirikufaya

  • Progressive Zimbabwean

    A damp squib. This budget confirms my fears on my dear minister’s capacity to innovate and come up with that wow effect in stimulating economic growth. This is just a budget to raise money to pay obligations to civil servants and other trinkets such as the ill advised demands for brand new motor vehicles by our chiefs. It leaves most households poorer when they are already struggling. We have formed lift clubs to cut on costs and have also cut on recreation thus having an effect on our mental and physical health as we now only use our cars for those inevitable trips and this is what Cde. Chinamasa does to our dry pockets. I am amazed at such dearth of creativity that is simply siphoning the little we have to fund a rather unnecessary and expensive lifestyle elsewhere.

  • Tsuro

    Minister you need to inject money into the system which is already dying and not take the oxygen to service China debt and ignoring other obligations

  • Cde Gabarinocheka

    Taxed to death

  • Command Center

    Hyowheee, Mhaiweee, Hezvoooh. An ordinary man’s life-line screws have been tightened to the core. Tichararama isu. GDP revised down by 50%, the only line that can boost the economy of the state. We are doomed as a nation to say the least. Increase tax on ‘Airtime’ and fuel, kwamunoziva kuti kurikupinda mari every second so that the ordinary man suffers. Car imports ‘Be-Forward is being targeted here, via Tanzania’, taxes increased by between 40-60%, Jesus God. Vakomana tiripama1
    Ukuwo Amai for President, dzimba dza VP gutted by fire, haaaa. Nyika iya yamakatipa tenzi, honai vanhu venyu zvovoita. SaMoses akasimudza nyoka murenje, kuti aninani anoitarisa, achaponeswa, Saizvozvo Jesu wakauya kutifira pamuchinjikwa, kuti aninani anotenda kwaari arege kufa, asi ave neupenyu husingapere. paakuda Jesu apa.

  • CONFUSED

    I was made to understand that our blending of petrol, up to 20% ethanol will result in falling petrol price, now what is this Mr Finance Minister? What is Mr Energy minister going to say about his E??

    • James Charles

      Neni ndazvishayawo ini Confused, ndatovawo confused sa Chinamasa ne team bhora mugedhi.

  • Keith

    so what is the benefit of extra government revenue when the impact is higher costs of living for the public? shouldn’t the policies be designed to improve the general standards of living of the people? their argument is increasing the government revenue will result in proper channeling of resources to develop infrastructure blah blah blah. that would be realistic if the record of government practices was commendable. but its not. the majority of zimbabweans find sustainable apart from government affiliations, lots fall in the informal and entrepreneurial sector. and these coming months shall be hell to them.

  • Mhofu

    WHY ALL THESE CHANGES WHEN THE ECONOMY IS NOSE DIVING UNCONTROLLED

  • omahn

    How about tax on non utelised land by farmers and land barons?

  • Choks

    haya zvakaoma shuwa, you are imposing all these increases to the poor Zimbabweans.ndiyo Zim Asset yacho here????

    • Tarwiraushe

      This is the same economic policies being used by ISIS in Syria and Iraq,taxing their subjects to fund their operations.

  • vms

    People I need to read your comments on this.

  • [email protected]

    for measures centered on imports and exports to be effective, the Gvt must tackle the corruption at the boarders by introducing stiff penalties. these violators are no better than ‘economic’ saboteurs. they must hang.

  • Judas Iscariot

    So out of the blue govt projects the gross domestic product growth to be 6%? They projected govt revenue to be 4,12 billion.without leaving any margin for error, govt projected its expenditure to 4,12 billion as well?So now govt has failed to meet it,s intended target without giving us reasons, why exports have slowed down.Gross domestic product growth is now expected to be 3,1%.Projected govt revenue is now 3,85bill, Instead of govt trying to find ways to cut it,s expenses to the same levels as the new projected revenue,they,re raising our taxes? Why are the ordinary citizens being punished for govt,s poor planning? Instead of cutting luxury perks, for cabinet ministers and legislators, its the ordinary citizen who has to pay the price? This is unfair.I am sure most of our govt ministries can produce the same results with half the employees, they currently employ,so why not look at ways to reduce the govt wage bill before raising our taxes? If we fight corruption,close loopholes allowing companies to evade taxes,stop giving farmers free imputs we can,t afford every farming season,then we will be alright.If import duty goes up it simply means we will import less, so you will probably collect less,if fuel prices go up,it simply means we will be making less trips,so we won,t be buying more of your expensive fuel. Instead of me and my wife both driving to work she will now have to drop me off.

  • absolute

    Are you not pushing your hard pressed people against the wall?

  • Dharad

    Hon Minister, in as much as we want to increase revenue for the govt, I think that we are also overburdening the very people we serve who are trying to make a living. Why cant we create more jobs like we promised last year. Increasing taxes, and duties is not solving the problem but making it worse.

  • Hombarume

    These guys have no meaningful ideas. All I see is tax, tax and more tax. This shows that there are not in control of whatever is happening.
    Its a shame. Why don’t you give up at your ages and give us the new generation a chance. We are busy contributing to the economy of other countries who accept our talent.
    It pains that we creating employment in SA. Though we came as employees now we are employers. With this type of policies you have lost us forever. We await meaningful policies.
    My advise is, make a compulsory 30% shelf space in all retails for locally produced or finished goods.Then you will see the economy grow. Make TM, OK and Spar to embrace this, only then can you collect more meaningful taxes. Not to think duty on imports is the solution.

  • proof read first

    fringe benefits have always been taxable read section 8!

  • http://www.herald.co.zw/ Marcus

    This is just austerity being pronounced. Zimbabweans are used to it but also government officials should lead by example. We have not witnessed any cap on expenditure by government officials, a review on their duty free luxury purchases, flying commercial etc. What we wish to see is a change of culture and an acknowledgement tt the change begins with all of us not a sense of entitlement premised on the notion that Ministers and other senior officials live on some island far removed from the rest of us. It helps to set that tone…but on the whole the poor man is being squeezed some more with the rise in the cost of travel, communication, and basic foodstuffs. we are bound to get less on our buck..all the same if it yields results we will hail it. We have been disappointed for too long.

  • GHG

    Makes sense, we cant have an unfunded government… go on honourable minister

  • Mupinyu Wasvotoka

    Ini i am informalizing everything. From the little Tax returns i have been paying ZIMRA hamuchaone kana CENT rangu from today. What a heartless govt which believes taxing Employers and employees to death is the rockbed of the propagandist ZIMASSET policy. You said under ZIMASSSET you would create 2 million jobs and those two million jobs plus the existing 500 000 currently formally employed would certainly meet your tax obligations. Now you are quiet on 2 million jobs and busy taxing the few remaining businesses to death. Munotongereiko kana mave madzitateguru. ?

  • Chinyarare

    eish…ndingatapwe mukanwa..typing

  • cj

    gv you absolutely right

  • Disappointed

    We are already over burdened by the economic hardships and this minister sees it fit to make it worse by trying to raise money for government thru us… God help, this is failure at its best, why dont you just resign kana wazvitadza..

  • Ray Mbada

    Scapegoating instead of thinking outside the box

  • Murabhauma

    Measures on motor vehicles will be effective on 1 November 2014 kuitira bonus

  • noman

    minister y are u making life more harder . its almost a year metbank kana mari imi munadzo moisa matax ekupenga coz u no pakati mari ndopakati chinamasa. chasara kutipa matax ekufamba muroad chaimo. how do u want to survive no employement apa mokwidza matax you only consider yo self. first consult public before maitaizvi. we need democracy yamunogara muchitaura. hatidi monopoly yamurikuita

  • Moe_Syslack

    Just shows how clueless this govt is. People are struggling to make ends meet and you go tax them even more so you can fund your lavish lifestyles and mansions in Borrowdale. Just pathetic.

  • leemoyo

    We only need 24 MPs and 15 ministers. How much will we save if all this bunch of useless people are of on the budget