HARARE- Zimbabwe’s mining industry has responded to the recent 2% money transfer tax introduced by government earlier in October, noting that it will be an additional burden to the mining industry.
The industry which said is already operating in a punitive fiscal framework, highlighted that some miners will shut down if the tax is not reviewed.
In a state of the mining industry report, a majority of the miners felt that the cumulative impact of tax ( which is levied on transactions across the entire mining value chain and is not based on ability to pay) is more than 30%.
The tax has since resulted in price increases across the mining value chain.
As part of measures to boost national income so as to close the deficit gap and curtail debt, government introduced a 2% tax on money transfers. The move was justified as having an impact of widening the tax net to a previously untaxed informal sector.
CZI which is an industry body representing manufacturers came out in support of the measure saying had it not been introduced, the economy would paralyse. It however said the measure should be withdrawn after a year of operationalisation to allow for business viability.
Other bodies such as ZNCC, however condemned the move and government went on to review the tax exempting some transactions. Econet and Delta which are the 2 largest listed concerns recently said the tax will have a demand dampening effect.
As Ncube presents his first budget in the next 3 days, it remains to be seen how far backwards he can lean and give in to some of the pressure. Despite the negatives alluded by some players, the tax can go a long way in reducing the budget deficit and help clear domestic debt to sustainable levels which in turn will have an impact on money supply.
Money supply has been fuelled by government borrowings and in turn resulting in inflationary pressure of huge proportions as exchange rate disparities widen.
– Equity Axis News