Finance Minister Mthuli Ncube today said people were definitely shocked by the two cents per dollar tax on transactions but Zimbabwe needed such austerity measures to fix the economy.
He denied accusations that he was insensitive to the plight of the people saying: “I am a very sensitive person but I am also programmatic…. We need to stop the bleeding. We cannot do this without pain.”
Ncube announced the tax on Monday when he revised it from the previous 5 cents per transaction.
The tax was supposed to be with immediate effect but Ncube today said this was still being fine-tuned and might be unveiled in the budget for 2019.
Parliamentary watchdog said the tax could not be implemented as Ncube needed to gazette the regulations first.
Answering a question soon after launching his Transitional Stabilisation Programme today, Ncube said it was essential for people to understand that the more pain they endured at the beginning the better it was going to be after a year or two.
He also said the tax was necessary because of the present circumstances. Measures that were effective in broadening the tax base in the past were no longer effective today.
He said the previous regime of five cents per transaction was regressive because people at the higher end were paying very little. The new tax regime was therefore introducing some fairness.
He said there was going to be a cap at the higher end and there were likely to be some exemptions as well.
“I need all hands on deck,” he said arguing that the rate was reasonable as one African country was charging 15 percent per transaction.
He also said he was going to do his part by ensuring that government cut its expenditure and was going to tell the nation how the tax collected was used.
He said he would like to use it for “things that touch ordinary people’s lives”.
Below is the full explanation.