Mixed reactions over imported goods tax hike

THE recent introduction of a 40% surtax on imported basics, among other restrictions, has been met with mixed reactions amid fears this will have a negative impact on local industry and the consuming public, businessdigest has established.

Kudzai Kuwaza

The government hiked import duty on selected products such as cooking oil, margarine, soap tablets and bars and washing powder from 10% to 40% last month.

While the adoption of multi-currencies in 2009 brought economic recovery from its comatose state and reversed the record hyperinflation that had rendered the local currency useless, it spawned a plethora of other problems that include the crippling of the local industry through the influx of cheap imports onto the market.

The use of foreign currency has seen an influx of cheap imported products as industry battles with a myriad of challenges that include outdated equipment, unreliable and expensive electricity, lack of long term funding to sustain operations and low capacity utilisation which plunged from 57,2% in 2011 to 39,6% last year.
This has sparked an outcry from the business community that faces the threat of collapse due to the influx of cheap imports. It has prompted calls from business for government to implement measures that will protect them from the devastating effects of the surge of cheap imported goods.

It has also negatively impacted on the country’s trade deficit
Bliss Brands, the South African maker of washing powder MAQ, this week decided to cease exports into Zimbabwe citing high costs that are being caused by the tax.

The increase in surtax has triggered fears of shortages of basic commodities on the market in what would bring back memories of the hyperinflationary era of 2008 when basic products were scarce and where customers endured empty shelves.

The increase could be part of the government’s strategy to protect the local industry.

Speaking at the Mandel/Gibs economic symposium early this year, Industry and Commerce minister Mike Bimha said there was need to strike a balance between protecting industry and protecting consumers.

He said they had to guard against protecting an inefficient industry as well as protecting an industry that will charge exorbitant prices for their products.

University of Zimbabwe economist, Fanuel Hazvinei, does not believe that the increase will trigger shortages in the short term.

“The increase in surtax charge will not create shortages,” he said. “Importers will continue to bring in commodities but at a higher price for the ordinary man.”

Hazvinei said the increased tax would only benefit the government as it would help boost its coffers.

“Industry does not need protective policies but needs government to put in place policies that make it conducive for local industry to be competitive,” he said.

Hazvinei added that industry need capital injection for local industry to be competitive.

However, Oil Expressors Association chairman, Jonas Mushangari, told businessdigest said the tax has breathed life into local industry particularly the cooking oil sector.

“The correct position is there are restrictions on imports, cooking oil and margarine through use of import licences and duties on finished products. These are meant to protect local industry,” Mushangari said. “Since the beginning of the year when these measures were introduced we have seen massive growth particularly in the cooking oil sector.”

He said some of the benefits include the coming in of new investors to partner with Surface Investment, United Refineries as well as a new oil plant set up by Pure Oil Industries and increased supply of cooking oil to a level where local suppliers are meeting national demand.

Mushangari said other benefits will be the increase of both capacity and employment as a result as well as decreased price of oil with the increase of local competition.
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6 thoughts on “Mixed reactions over imported goods tax hike”

  1. lovethynation says:

    Oh come on Minister Chinamasa do you really want to go down in history as having caused another collapse of the Zimbabwean economy??? Dr Gono was responsible for the hyper-infationary collapse and now shall be raised to the echelons of senator for the empoverishment of a nation. Now you want our supermarket shelves empty as companies close and people become unemployed. Our farming of basics such as maize, soya beans, wheat and sugar beans is at its lowest and you have increased duties on products made by these raw materials. As if that is not enough, why not make the transportation of everything more expensive by increasing the price of fuel and making toll gates more expensive. Oh and to further burden the man on the street lets tax his airtime a well…
    Thank you honorable minister we are blessed to have you..

  2. protestor says:

    Tirikurira akomana Toll gate rakakwira,Cellphone tax increased,so we need salary increments

  3. top heavy says:

    And what are you doing about the dirty second hand clothes that are a possible conduit for the transmission of the deadly ebola and the destruction of the clothing industry?

  4. Nazmo says:

    Zimbabweans are being screwed by Mugabe’s Zanu PF left right and center, he is useless for the country, he only servers the black elitists in his mafia party. So much for black majority rule this does not intrigue us to witness the jockeying for power by the top brass which will include Grace his wife.

  5. Nazmo says:

    The Independent newspaper might as well close shop if it is afraid to print readers views that Zanu PF will not accept.

  6. MUNYARADZI says:

    there s really no local industry to talk of. to begin with, zimbabwe does not have a sovereign currency. the economy is yet to recover. to apply school boy economics to a complex problem is unimaginative. government does not have money coz the economy is not functional, excessive taxation will further diminish consumption which is as it is supported by foreign inflows.

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