Government is realising $80 million monthly from the 2 percent Intermediated Money Transfer Tax introduced in October last year, according to Minister of Finance and Economic Development Professor Mthuli Ncube.
At its inception, Minister Ncube highlighted that the tax levied on amounts above $10, was designed to broaden Government’s capacity to fund capital projects and retooling of the productive and other critical sectors.
In an interview on the sidelines of a tour of Nestlé Zimbabwe on Monday, Minister Ncube said the proceeds of the tax would be directed towards social services and social infrastructure projects and devolution expected to cost $310 million.
“We are averaging around $80 million a month in terms of collection because we gave quite a lot exemptions and we believe that at this level it’s okay and that will go a long way in supporting the social infrastructure and social services. We have said what we are targeting is education, health services and devolution — the cost of devolution is $310 million,” said Minister Ncube.
He said his visit was meant to gain on-site knowledge about the firm’s operations and areas that required Government aid.
He acknowledged that foreign currency shortages were hampering the company’s retooling programme and Government would do all it could to address the challenges faced.
“I was able to see some of the machinery that requires to be re-commissioned, because of shortage of forex they have not been able to do that. So we are doing everything we can to support them in making sure they re-commission these machines and be able to meet the domestic and regional demand for Cerevita, Cerelac and Cremora products,” he said.
“Therefore, we need to see how we could spread our foreign currency around to support them so that they can meet export demand and earn forex as a result of that little that we would have advanced to them.”
Meanwhile, addressing accountants at a workshop in Gweru yesterday, Accountant-General Mr Daniel Muchemwa said $50 million was collected in January alone through the 2 percent tax.
Mr Muchemwa told the accountants the money will be used for Public Sector Investment Programme (PSIP) projects.
“I am glad to say that this January we managed to collect $50 million on 2 percent tax,” he said. “We will spend that money on PSIP projects and not on salaries. I would like to applaud Government for such efforts, which have seen the raising of the money which will be channelled towards funding PSIP projects.”
Mr Muchemwa said Government was on the path to establish the National Chart of Accounts, which is a listing of all accounts used in the general ledger of an entity.
“It has been noted that, currently, central Government accounts exclude the other tiers of Government,” he said. “In 2018, local authorities consolidated their charts of accounts, paving way for drafting the 2019 Budget.
“In line with the Government trajectory, it was observed that central Government and local authorities must reconcile their chart of accounts. The whole thrust is meant to ease the task of locating accounts within a system.”
Mr Muchemwa said the consolidation of National Chart of Accounts will facilitate national accounting reports in an effort to create an environment to achieve Vision 2030.
The $80 million revenue monthly comes at a time Government was expected to earn an additional income of at least $3 billion from excise duty levied on petrol and diesel this year following the recent fuel price adjustment.
Government reviewed fuel prices upwards on January 12, 2019 to eliminate rampant corruption that was taking place in the fuel sector, which resulted in spiking demand for petrol and diesel.
The fuel price adjustment left petrol prices at $3,31 per litre while diesel is retailing at $3,11 per litre. The price adjustments eliminated long winding queues for fuel as demand suddenly slumped.
The adjustment of the fuel price pushed up Government’s excise duties on fuel from 45c per litre to $2,31 per litre for petrol, while excise duty for diesel and paraffin rose from 40c per litre to $2,05 per litre, which allow for more revenue to be generated.
The Ministry of Energy and Power Development says the normal consumption of diesel is 2,5 million litres per day while 1,5 million litres of petrol are consumed per day.
According to Zimnat Asset Management: “Against this background, the excise duty on petrol (excluding rebates) is likely to increase from $20 million per month to $100 million per month, while the excise duty on diesel (excluding rebates) is likely to increase from $30 million per month to around $150 million per month.
“On an annual basis, assuming normal fuel consumption levels remain unchanged, Government stands to collect in excise duties, at least $1,2 billion from petrol and $1,8 billion from diesel, excluding tax rebates.
“Excise duties on fuel will therefore be projected to surpass the 2 percent intermediated tax collection projections for 2019, as the largest source of Government tax revenue.”