FINANCE minister Mthuli Ncube’s nightmarish start at the
helm of Treasury worsened at the weekend, with the Law Society of Zimbabwe
(LSZ) accusing him of violating provisions of the Finance Act by introducing
the new 2% tax for each dollar on electronic transactions without seeking the
necessary amendment to the Act.
This came amid reports that the new tax regime was not
sanctioned by the Reserve Bank of Zimbabwe, as required at law.
The LSZ, in a statement, urged Ncube to rescind the
decision and follow proper procedures.
“In light of the serious financial and practical
implications of the announcement to all enterprise and common persons, there
has been a public outcry and calls for the minister to rescind the
announcement.
The Law Society of Zimbabwe and its members support the
call that the two cents per dollar tax on all transactions be rescinded
because, among other reasons, its imposition is unlawful,” LSZ said.
Ncube is accused of violating sections 22G of the Finance
Act, which fixes a five cents tax for each transaction exceeding $10 on which
the tax is payable and this, could only be changed through an Act of Parliament
and not a Government Gazette.
“As the law stands, the minister’s directive to all
financial institutions, banks and Zimra (Zimbabwe Revenue Authority) working
together with telecommunication companies to collect $0,02 per every dollar
transacted is unlawful because it violates section 22G of the Finance Act.
The proper procedure for the amendment of a law (in this
instance Section 22G of the Finance Act) is through Parliament as required by
the Constitution, and not through a policy statement,” LSZ said.
LSZ said Ncube could not take a “short-cut” on this matter
because the current increase in tax was a compulsory acquisition of property
rights which, at law, should be conducted in strict compliance with the
Constitution.
“Property rights enshrined in section 71 of the
Constitution are jealously guarded.
To that end, an acquiring authority must comply with the
requirements of the law to the letter.
Among those requirements is section 71(3)(c)(i) of the
Constitution, which calls upon an acquiring authority to give reasonable notice
before acquisition is effected,” the statement read.
It is understood that RBZ governor John Mangudya was
opposed to Ncube’s new tax measures, which, instead of bringing stability to
the market, triggered price hikes while putting a huge dent on financial
inclusion by the central bank.
“The RBZ was not consulted on the new tax measures which it
views as a major dent on its drive for financial inclusion, acceptance of
plastic money and has massive impact on attracting local and foreign
investors,” a highly-placed source in the financial services sector told
NewsDay.
In 2016, Mangudya capped bank and money transfer charges as
part of efforts to bring down costs on plastic money transactions, before Ncube
last week introduced a raft of measures including the two cents per dollar for
every electronic transaction.
Ncube later reviewed the new tax following a public outcry
and exempted other transactions, but left middle-income earners and ordinary
people heavily exposed.
The Zimbabwe Congress of Trade Unions (ZCTU) at the weekend
described the new tax regime as “retrogressive” and threatened to mobilise for
mass demonstrations on Thursday to force Ncube to rescind the decision.
“This extension of the collection of the intermediated
money transfer tax to all financial transactions is regressive in that it
negates the very essence of such platforms that were established to promote
financial inclusion,” ZCTU said in a statement.
“Taxing the formerly financially excluded poor people,
especially in rural and urban communities, is highly retrogressive and
regressive.”
Ncube, however, insisted that the poor were covered by
exempting transactions below $10.
“We have covered that bit by revising the tax regime and
saying all transactions of $10 or less are exempted from the tax, we have
covered the poor,” Ncube said. Newsday
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