Zimbabweans are more worried about escalating prices than the two percent tax on transactions so the feeling that the tax has not been embraced is misleading and false, Finance Minister Mthuli Ncube told Parliament.
He said the tax would be used to alleviate poverty and will finance devolution for which the government has allocated $310 million to the country’s 10 provinces.
“The issue about the 2% tax is not about Zimbabweans being unwilling to pay it, they have embraced it. The feeling that it has not been embraced is misleading and is false,” Ncube said in response to questions raised by legislators on the 2019 budget.
“Zimbabweans have embraced it, in fact each time I speak to ordinary Zimbabweans, they say Minister the issue is not the 2%, the issue is prices. Prices are high and that is the issue, fertiliser irikudhura, inhlanyelo iyadula that is the issue not the 2% tax.”
Ncube introduced the two percent tax on transactions in October and there was an immediate backlash with prices rocketing.
The tax was introduced at the same time that the Central Bank reintroduced foreign currency accounts triggering fears that people might lose their savings.
The Central Bank insists the bond note and the US dollar are at par.
Ncube acknowledges that there is a thriving black market but he prefers to call it a premium.
“What we are going to be doing Mr. Speaker Sir, out of the revenue from 2 percent tax, we will extract $310 million and use it to finance the devolution needs. We have taken money from the people; we are giving it back to the people, through the devolution exercise,” Ncube said.
“The remainder will be used for funding education, health services and closing potholes so that people really feel where this money is going. We need more ambulances, so you will see us motivating for the purchase of more ambulances and supplying more schools desks to make sure that the infrastructure is upgraded. It is going to go to social services and to fund devolution. “