Our Finance Minister does not miss an opportunity to laud the positive effect that the 2% tax has had on government revenue and once again he has come out and said the revenue collection is growing exponentially.
In an interview conducted by the Herald, Prof Ncube claimed that the Ministry is raking in close to $80m every month;
We are averaging around $80 million a month in terms of collection because we gave quite a lot exemptions abd we believe that at this level it’s okay and that we’ll 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
Of the $80 million a staggering $50 million was attributed to the 2% tax…
Devolution???
The devolution Mthuli speaks of is the surrender of powers to local authorities by central government. It will change the way decisions are made for local areas and how public services are funded.
Ideally, this will result in more effective, better targeted public services, greater growth and stronger partnerships between public, private and community leaders in local areas. Without devolution, decisions will continue to be made centrally and removed from communities that they affect.
Public projects?
Mthuli Ncube once again emphasised that the funds collected from the 2% tax will be directed to public services such as education and health. Previously, Mthuli stated that the funds from the 2% tax will go towards fixing water and sanitation.
Echoing these statements was Accountant-General Mr Daniel Muchemwa who said the funds will NOT go to paying salaries:
I am glad to say that this January we managed to collect $50 million on 2% tax. We will spend that money on PSIP (Public Sector Investment Programme) 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.
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There was never any issue about revenue collection. Most urban, working class tax payers have always complained about HOW collected revenue is used, pointing out the govt’s wastage on white elephants or personal luxuries for govt officials. It is that mind set that needs changing first so that every collected dollar is utilized to benefit those who paid it or society regardless of party-affiliation.
I agree
best ipapo
It is also the sudden shocking nature of these ininiatives. It is also the bad planning, implementation and communication which is wrong! On a side note: so many grammatical and spelling errors in the report on his words!
80m only… Are we sure they not under declaring …I really find that hard to believe… It was estimated week above that
And now we can fly around in a luxury aeroplane. 2% tax funded
You are an idiot
The President should sit down with Mthuok again and explain with the aid of illustrative diagrams the role of Minister of Finance and Economic Development is to GROW THE ECONOMY AND GENERATE EMPLOYMENT not merely to shrink the economy and pulverize formal employment and informal coping strategies of the unemployed worsening poverty and livelihood insecurity.
We already have one DG for ZIMRA with tax collection monthly growth targets. And because of separation of functions the DG has no power to meet the tax revenue targets by increasing taxes without due condideration on growth and livelihoods side effects.
Mthuli Tax is indiscriminate in robbing money from the poor roadside vendors and rural farmers living on less than $2 per day but save to pay $450 school fees per term at misson boarding school. Selling 2 mombe for $600, Mthuli takes $12. The grossly underfunded regulatory agencies surviving on quasi fiscal taxation along the cattle value chain collects $116 per beast (RDC $33, RDC abattoir levy 10, AMA 3, DVS 15, ZRP 10,ZRP ROADBLOCKS 10, CITY COUNCILS 15, EMA 3) collectively. The total taxes amount to $245.Payment of these attracts 2% tax or $4.80 bringing final tally to $250.
Then the rise in fuel duty meant to increase inflows to the fiscus kicks-in at $1.16 per litre for 40liters needed to ship four beasts to the abattoir. This will adds $27.40 bringing the total tax burden to $278. The payment of $450 fees itself also attracts the 2% Mthuli TAX adding another $9 to tax burden put on the poor smallholder farm family by Mthuli Ncube. The effective tax rate for the smallholder farmer selling two mombes to pay fees for one child at misdion school is a staggering $286 or 48%.
Zimbabwe’s average smallholder communal farmer with 5 mombes, 6 goats and 12 chickens farms 2 out of 3 hectares under maize, groundnuts and sorghum from where they will earn annual net income of $300 per year well below the ZIMRA threshold for income tax assessment. Even after adding $600 gross sales receipt or $300 net receipt, the total income of $900 per year is below taxation amount. Yet Mthuli collects 2% transaction taxes and implicitly allows govt regulatory agencies to predate on farmers robbing them.48% in taxes when they market cattle. Suffer continues for the poor rural farmer and the poor urban self employed.
I think the starting line is to cut salaries and allowances for Ministers, their deputies, permanent secretaries and other high ranking officials from whatever the amount it is… to less than $10 000 (R141 00). Then remove all transaction below $500 from 2% tax and this is the range of transaction for many of our ordinary citizens. Take all the money cut from the salaries of all those high ranking government officials, money from diamonds, gold, tollgates, zinara, and zimra etc, use it for health, infrastructure, and service our external debts, rather than robbing the poor citizens who have been suffering for a long time.