THE Zimbabwe Revenue Authority (Zimra) is illegally collecting tax on the private sale of second-hand motor vehicles as there is no enabling legislation allowing it to do
so, lawyers charged this week.
The lawyers, who have prepared a document on this unlawful activity by Zimra, said a class action should be brought against the tax collector and the Finance minister, as their actions have no legal basis.
The lawyers said according to Section 16 (7) of the Constitution of Zimbabwe, the tax may only be collected under the authority of the law. Section 4 of the Sales Tax Act stipulates that the incidence of sales tax can only be changed by an Act of parliament.
The lawyers said the incidence of tax could therefore not be changed by ministerial statement or by a statutory instrument.
In his budget speech on November 14 last year, Finance minister Hebert Murerwa announced the extension of tax to individual sales of second-hand motor vehicles with effect from December 1. Tax was already levied on second-hand vehicles sold through registered car dealers.
After Murerwa’s announcement, Zimra set about collecting tax on the private sale of motor vehicles with effect from December 1.
“There was no such legal authority to begin applying the new tax on December 1 2002,” the lawyers said.
“The law had not been changed to give effect to the minister’s statement of intention. The law remained and still remains as it was when the minister spoke on the 14th of November,” the lawyers said.
The lawyers have pointed out that the Finance Act of 2002, which gave effect to the 2002 budget, failed to make an express amendment to the Sales Tax Act to legalise the collection of tax. They said the insertion of a new Section 19B into the Sales Tax Act, provided for by the Finance Act of 2002, did not address the illegality. Transfer of ownership on second-hand vehicles can only take place when tax has been collected, which lawyers have cited as a major flaw.
“The new Section 19B of the Sales Tax Act is a half-baked provision, to which insufficient thought has been given. It seems to assume that all changes of ownership of motor vehicles flow from sales attracting sales tax,” the lawyers said.
“That is not so. Quite apart from sales not attracting sales tax, and donations, what about those not infrequent changes of ownership where motor vehicles pass from a deceased estate into the ownership of the heir or a legatee?” they said.