Finance and Economic Development Minister Professor Mthuli
Ncube says the Government will continue doing the right thing even when it’s
not popular, saying the Intermediated Money Transfer Tax (IMTT), popularly
referred to as 2 percent, has enabled Government to attend expeditiously to the
Cyclone Idai disaster and critical infrastructural work without resorting to
borrowing as was the case previously.
Writing in his weekly column Professor Ncube said that
Government had managed to provide a 10th of the $1 billion required to cater
for non-infrastructure supplies as well as quick infrastructure rehabilitation
of roads and bridges, power, communication, irrigation, housing and water and
the dualisation of Norton strip of the Harare-Bulawayo Highway.
The Norton strip is expected to be opened by President
Mnangagwa soon after the completion of the construction of a road over rail
bridge along the same stretch, which is underway.
“From a Governmental perspective, Cyclone Idai necessitated
an urgent and immediate need for resource mobilisation to mitigate against its
effects and support those affected. In the past, this would have meant further
Government borrowing, leading to extra debt and long term economic
ramifications,” he said.
“In the past, this would have meant further Government
borrowing, leading to extra debt and long term economic ramifications. But
fortunately, funds from the 2 percent tax that were put aside for exactly this
eventuality, and became available exactly when they were most needed. We had
initially earmarked $50 million to cover the emergency requirements for
mitigating the impact of such a disaster, yet due to the increased performance
of the fund, we were able to increase this allocation to a much needed $100
million. These funds are being used to help those who are most in need of our
help.”
Professor Ncube said while the 2 percent levy had been
handy in assisting Government to attend to pressing needs, the magnitude of the
Cyclone Idai disaster and the work that is still outstanding had raised the
need for long term economic planning and
sobriety, even if it is unpopular.
“There is so much more to do to mitigate the impact of
Cyclone Idai, and this sum we have put aside amounts to around one tenth of the
estimated one billion dollars we require to cater for non-infrastructure
supplies as well as quick infrastructure rehabilitation of roads and bridges,
power, communication, irrigation, housing and water. The scale of the need will
require the coordination and support of public, private and development
partners, and while we greatly appreciate all the support we have already
received, much more is needed.
“But what Cyclone Idai has done is to reaffirm the need for
long term economic planning and sobriety, even if it is unpopular. Nobody likes
to be asked to pay more taxes, certainly not those who are already struggling
to make ends meet. We are aware of this, and are doing all we can to spread the
burden evenly, and minimise what we ask for from those who have the least.
“But in just six months, the 2 percent tax has helped us to
cut the deficit, invest in vital infrastructure, and put aside a sizeable sum
that is being used to mitigate the effects of Cyclone Idai. Simply put, the 2
percent tax enables us to help those desperately in need of our assistance.
Whatever your politics, whether popular or not, it is the right thing to do.”
Professor Ncube said this was their guiding principle when
they were considering introducing the 2 percent tax.
“We knew that the actions we needed to take would not
necessarily make us popular, but they were necessary nonetheless. I was
comforted in this realisation by the wise words of Albert Einstein, who
famously wrote that “What is right is not always popular and what is popular is
not always right.”
Apart from assisting Government to meet critical needs the
2 percent tax, which was introduced in October last year, has resulted in tax
performance exceeding all expectations, and to date, $449 million collected.
This has helped to cut the monthly budget, for example from
a US$242 million deficit in November to a surplus of US$733 million in
December. Chronicle
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