New tax regime to earn govt $2.6bn annually: Economists
Treasury will earn about $2.6 billion annually from the new tax regime announced by the Finance Minister Professor Mthuli Ncube, economists have noted.
The country`s purse-holder announced an increase on money transfers to 2 cents per every dollar transacted from 5 cents per every transaction in order to widen the tax base.
Speaking at public lecture organised by the Public Policy Research Institute of Zimbabwe (PPRIZ) on implications of the monitory policy, Thursday, former Chairman of the Mr Dumisani Sibanda, said government will receive over $2.6 billion from the tax.
Sibanda added that the country cannot continue using the multi-currency system as it will affect the imports and exports balance, and urged government to adopt the South African rand as the medium of exchange.
“I do not know how we are going to continue as a multi-currency system because the sad thing about the US dollar is 60% of our exports are to South Africa while 80% of our imports are in South Africa,” said Sibanda.
He said this will lead to an increase in inflation arising from exchange rate movement.
“When we are exporting to South Africa, their market will not accept to be invoiced in US dollar, they will invoice and we pay in rands,” said Sibanda.
“Exporters will be forced to break rules by having to trade in the parallel market to afford to pay for local goods and services”.
Sibanda also said Zimbabwe cannot attract good investment because it is a high risk investment destination.
“Zimbabwe does not meet the investment criteria used by FDI and World Bank. It means we can only get investment from mafia who do corrupt things around the world and want to clean their money,” he said.
“They tend to exploit and not build an economy of the country”.
Nissi Global Chief executive officer Mr Sonny Phiri expressed disappointment at the monitory policy saying in 2009 he deposited a lot of United States Dollars into his bank account but the value of the money has been eroded.
The market has reacted negatively to the new tax regime with prices of basic commodities and services continuing to increase.