Zimbabwe News and Internet Radio

Court test for unpopular tax

By Farayi Machamire

Finance minister Mthuli Ncube’s desperate bid to balance the government’s shambolic books by raising the State’s revenue through an unpopular new tax is facing a sharp court challenge.

Zimbabwean Finance Minister Mthuli Ncube (File: AFP)
Zimbabwean Finance Minister Mthuli Ncube (File: AFP)

This comes after a prominent civic leader filed an urgent application in the High Court yesterday, seeking to reverse the minister’s controversial two cents per transacted dollar new tax which became effective at the weekend.

Ncube is yet to file his opposing papers in the case.

The chief executive of the Combined Harare Residents Association, Mfundo Mlilo, said in his papers that the much-criticised tax is illegal as its regulations — announced in a Government Gazette last Friday — had not been affirmed by Parliament.

Legally, a Cabinet minister cannot alone change an Act of Parliament as the august House is the only body mandated to repeal such laws.

“It is my contention that the Intermediated Money Transfer Tax, like any tax, has to be legislated for through regulations and in the particular case of a tax through Parliament.

“Without the law it is my contention that the respondent’s actions are a nullity. The respondent did not comply with the above. He did not table any Finance Act.

“He literally made an announcement in a beer hall and expects Zimbabweans to be bound by an announcement made in a pub,” Mlilo said in his challenge.

“Indeed pursuant to the provision of Section 36G … Section 22G of the Finance Act currently provides that, the Intermediated Money Transfer Tax chargeable in terms of Section 36G of the Taxes Act shall be calculated at the rate of $0.05 for each transaction exceeding $10 on which the tax is payable.

“Therefore, the Import of Section 22G is that a fixed charge of $0.05 is chargeable on every transaction exceeding $10,” he added.

“The fact of the matter is that section 22G has not been repealed and remains the only lawful tax chargeable on such transactions.

“It follows that the minister’s directive to all financial institutions, banks and Zimra working together with Telecommunications Companies to collect US$0.02 per every dollar is unlawful and a nullity as it infringes Section 22G of the Finance Act,” he argued further.

Mlilo’s challenge comes as the much-disliked tax became operational on Friday after it was gazetted by the government following a tumultuous two weeks in which long-suffering citizens rejected it outright as they felt that it further worsens their economic situation.

Ncube has also been criticised heavily for not consulting sufficiently on the matter, as first reported by the Daily News — with his colleagues in government and Zanu PF bigwigs laying the blame on him for the current volatility in the country’s sickly economy.

The under-pressure minister — who had earlier vowed that he would not go back on his controversial tax — was later forced to eat humble pie when he was compelled by his bosses to review the tax.

But the tweaked tax has still failed to douse the raging fires as the economy has remained in dire straits — as highlighted by empty supermarket shelves and the closure of some prominent retail and fast food outlets.

Meanwhile, the main opposition MDC and radical pressure group Tajamuka have put the government on notice — and are pushing for rolling protests against the deteriorating economic environment in the country, as well as the two cents per dollar tax.

This follows a police crackdown on the country’s labour leaders who had attempted to organise last Thursday’s foiled protests against the controversial tax.

When Ncube presented his new measures at the beginning of the month, he laid bare the extent of the government’s problems — revealing that its domestic debt had ballooned from $276 million in 2012 to nearly $10 billion today.

In addition, Zimbabwe’s external debt now also stands at $7,4 billion — bringing the country’s total debt to $17 billion.

Ncube said driving the government’s huge debt was the issuance of tradable paper that it uses to borrow from banks — Treasury Bills (TBs) — which had increased from $2,1 billion in 2016 to a staggering $7,6 billion by the end of August this year.

In his court challenge, Mlilo further argued that the two cents per dollar tax was irrational as the government’s lavish and wasteful spending had created the current situation.

“It is therefore irrational for the same government to then fault us and increase the costs of the same (transactions).

“The government is subject to the rule of law. Its decisions can be challenged on the basis of irrationality,” he contested.

President Emmerson Mnangagwa, 76 — who was elected as Zimbabwe’s substantive leader in the hotly-disputed July 30 national elections — has been working hard to revive the country’s battered economy.

But while most Zimbabweans warmly received his recent Cabinet picks — in which he dumped the old guard which had been a permanent feature in ousted former leader Robert Mugabe’s previous government — his administration’s latest policy initiatives have drawn significant public scorn. DailyNews