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An increase in the price of fuel through the proposed fuel levy will only increase production and delivery costs of Zimbabwe’s products, further rendering them uncompetitive in the region

Nick Mangwana View from the Diaspora
Some people say that the higher the number of taxes a people pay, the greater the failure to build a civilised society. Another clever individual said a government can wreck businesses by confiscating its money via taxation.Maybe this is the thinking in some people when they decide to increase taxes but don’t want to say they are increasing the taxes. They will tell you they are considering charging a levy for a specific purpose.

Just like our Government, which is contemplating charging a new tax regime called the fuel levy. The reasoning behind this is to ensure that all victims of road traffic accidents have a fund from which they can be compensated for any such road tragedies.

This sounds like a very noble idea whose intention should be applauded. But how efficacious is this idea? How viable is this in our current climate and is there no other way to approach this?

How do we explain the insurance policies we all compulsorily buy that all vehicles must have to be on the road? And how many levies have Zimbabweans paid over the years which have not ended benefiting the targeted end-user?

One of the things that starts alarm bells ringing is the lack of accountability and transparency of money from the public. Issues like how much do the police collect in fines periodically and what is it being used for?

It is as if these are not public bodies or institutions and the public does not have a right to know. But we do have a right to know. Sharing this information avoids a lot of unhelpful speculation and negative perception. If we have nothing to hide, then let’s publish.

Tollgate fees are a type of a tax which the public pays to get its roads sorted out and made safe. That safety should also be the focus of our Government and not the compensation of the public after the fact.

What is happening to the money collected every day at these sites because surely our roads were recently declared a state of national disaster and yet we continue to pay?

The Registrar-General is also collecting all this passport money which is not going to the Consolidated Revenue Fund. How much is being collected and what is it being used for? This is public money and it should be disclosed.

We should account through open disclosure for the money we collect already before we collect further money which a sceptic public does not believe will end where it is meant to end.

There is no doubt that our roads are death traps and something should be done expeditiously. We have an average of 2 000 Zimbabweans dying on our roads every year. A lot more are maimed. But all we seem to think about is how to make money. That’s exactly how it seems.

Why are we talking of closing the stable doors when the horse has bolted? We are talking of how to compensate the bereaved and the injured; why are we not addressing the issues that cause these accidents with conviction?

The state of our roads is a clear factor. Some would argue that we have dualisation coming. It is surely coming and thank you. But by the time it covers the whole country how many orphans, widows and cripples would these roads have created?

Potholes are not solved by dualisation. They are solved by the maintenance of what we have. And we are being levied tollgate fees for that. Yet now we have moved on and are thinking of another levy on top of the insurance policy which every car has.

In fact, let’s dwell a bit on the issue of the insurance policy. The purpose of an insurance policy is that claims can be made against it in the event of the triggering event occurring during the subsistence of the policy.

A sizeable number of vehicle insurance policies in existence in Zimbabwe right now are Third Party policies. This means that whilst they may not cover the insured against losses they may suffer because of an unforeseen occurrence, all other parties adversely affected by the occurrence (in this accident) should be compensated for it.

So, in short, every vehicle in Zimbabwe at least covers third parties in the case of an accident. Now we are contemplating forcing every driver to pay an extra buffer in terms of a fuel levy for the same purpose?

This probably means that the current insurance regime does not adequately cover the public when an accident happens. It is that which should be addressed. Not to levy drivers further by creating a second-tier insurance policy. We should look at our whole insurance regime, review it and reform it to make it fit for purpose rather than lump Zimbabweans with another levy.

For starters, when one applies for these insurances, one is given a boiler plate or generic insurance which does not consider one’s driving history. It totally ignores the history of the driver because the insurance follows the car and not the driver.

Therefore, it does not matter whether that car is going to be driven by a 30-year-old with a long history of drunk driving, a 22-year-old who only passed their driving test yesterday or a 53-year-old veteran with a 34-year-old unblemished driving record. They are all meant to pay the same because what is insured is the vehicle and not the driver.

If that does not need reform then what does? What sort of risk assessment can one surely do without looking at history? It is the driver who should surely be insured because the car does not drive itself for it to carry a Third Party insurance.

In the first place, maybe it is only the Diaspora that are never given insurance policy documents for Third Party insurance for, surely, this columnist has never received any. The only document received is always a certificate but not the actual policy. Are these really insurance policies or some pieces of paper not worthy their prints defacing our windscreens?

To encourage most drivers to be taking comprehensive insurance covers, there should not be a significant difference in the premiums paid between a Third Party cover and a full comprehensive cover.

Once these are close then there is not much to be gained by taking a basic cover which for all intents and purposes is not an adequate cover. There is a problem with inadequate risk practices in the Zimbabwean insurance context. It is that which needs addressing and not overburdening responsible drivers with further levies which will not be adequately accounted for and maybe won’t even benefit the victims of accidents.

Is the public adequately protected by the current insurance regimes? If yes, then why are we mooting a levy to cover the gap? If no, why are we not addressing the actual problem than trying to patch it up?

Zimbabwe is not experiencing high inflation which could justify a challenge for our actuaries to calculate insurance premiums that adequately underwrite the risk posed. But we cannot continue levying universal taxes which are not aligned to the risk that we are trying to manage. It’s high time we stop looking at governance and transparency as buzz- words. These are ideals which should sinew our public bodies and corporate world.

The way insurances are sold by touting young persons outside post offices and Zimra tells you that there is weak regulation. All one needs to have is the registration details of the car and then it’s done.

These well-meaning young people don’t care about anything else but to hold that $30 which clearly would bankrupt the insurer in the event of an accident. But if the insurance industry is reformed in Zimbabwe it has a knock-on effect on the whole economy.

Our current approaches are informed by a Government desperate for cash. So, any scheme that would bring hard cash is vaunted as the best innovation since sliced bread, when clearly the idea is to live for today.

Anyone who wants to sell an idea just needs to indicate how much cash the idea will bring in the short term and they will not run out of buy-ins. This fuel levy might bring cash but not solve the problem. Instead it will bring even lot economic problems. Let’s face the fact that goods produced in Zimbabwe are expensive and therefore uncompetitive in the region.

This is the reason why there was resistance to SI64 of 2016. An increase in the price of fuel by an extra taxation called fuel levy will only increase the production and delivery costs of our products further rendering them uncompetitive in the region.

This will encourage smuggling and the sprouting of the black economy. We should make the manufacturing of goods in Zimbabwe competitive by not burdening the industry that employs our people with further taxes when we can reform the insurance industry itself to make it fit for its purpose. If we push on with this levy idea then we should ban Third Party insurance policies because that duplication cannot be justified

Sometimes we should look at the efficiencies of our current regimes before we think that taxation is the panacea to incompetence, dishonesty and fraud. The Government has a moral duty to keep taxes low and efficiencies in upscale.