People are now on a spending spree as the festive season reaches its climax. Whilst we are in the festive season mood many hardly pay regard to the cost of buying things or send money because we are just elated.
However, some remain cheapskates whether it’s festive or not, to the extent that they don’t even want to pay a cent of tax. The tax I’m talking about here is that 2% tax. Some pennywise people are managing to avoid paying this tax. They are avoiding the tax when they use EcoCash (simply because its used by many people), I’m not sure if other platforms are being used to do this. So my explanations will be in relation to the use of EcoCash.
How are they doing it?
As you well know the 2% tax starts to take effect when you spend or send above $10. So what some ‘clever’ guys are doing is; they send money in batches that don’t exceed $10 hence they don’t get charged the 2% tax. Suppose they want to send someone $20, they send $10 in two transactions (to make it $20) rather than send $20 in one transaction where they will be charged 2% tax (since $20 is over above the $10 threshold). Ingenious and tedious right?
I know you see getting charged EcoCash fees twice (by sending $10 twice to make it $20) and you start to think that the transaction becomes pricey more than just sending the $20 once and getting charged EcoCash fees and the 2% tax. But NO it doesn’t make the transaction pricey. Let’s do the math on this $20 transaction and you’ll see it for yourself:
- If you send $20 in one transaction you are charged: 0.37 (EcoCash fee) + 0.40 (2% tax)= 0.77 cents. You are charged 0.77 cents for sending $20 in one transaction.
- If you send $20, as two $10 separately, you are charged: 0.16 (EcoCash fee for the first $10) + 0.16 (EcoCash fee for another $10)= 0.32 cents. (Remember you are not charged the 2% tax for transactions of $10 and below, you are just charged EcoCash fees that’s why there is no 2% tax in that math). So you are only charged 0.32 cents for sending $20 as two transactions of $10.
As you can see this kind of tedious ‘tax avoidance’ is only feasible when you want to send money to another person instead of paying a merchant. Yes, it’s still cheaper to make payments that way (send money in batches) but it’s not feasible. Will a cashier in Pick n Pay tolerate you to pay for a cake in batches? No, I don’t think so.
Forgive me for throwing the word ‘tax avoidance’ in the middle of nowhere. As it happens, I’m no expert at tax but I’m curious to know if this practice is tax evasion (illegally dodging taxes) or tax avoidance (legally dodging taxes). Let us know in the comment section below
Share
Home
5 comments
Yeah yeah it is called tax avoidance which is very legal. Problem is it is feasible on a small scale. Otherwise where the transaction value is higher, it may not make so much sense to split the transaction into 100 units! You will need to perform that while your phone is hooked onto a charger!
A normal and responsible citizen must gladly pay the tax. No two ways.
I dnt have a problem of paying tax for the good of the country but I really dnt want to pay tax without remorse for the upkeep of a chief who I have never met and anything he or she does will never have even 0.0000000001% of an impact on my life. I dnt want to pay taxes because my money will be used as government aid given through party lines even if government aid stops being given out it won’t affect me. I dnt want to pay tax simply because being Patriotic simply means supporting the rolling party.
Paying tax means you support your country, your part is paying taxes. Whether or not those taxes are used properly is irrelevant.
Paying TAX is not a problem since it improves our economy but now the amount is too high, we must also consider the life of our sisters before we take the little they have. this is like filling a pit buy digging another pit! The economy is difficulty for everyone not only the government and also TAX must be affordable not a burden to the payers. Take look at the Mugabe era, people were charged TAX of 5c per transaction, that went on I think for more than 2 years but no one complained, why-because it was affordable. Let’s pay TAX yes so that our country can improve but please don’t rip off our salaries!