FINANCE minister Patrick Chinamasa was forced by cabinet last week to reverse the implementation of Statutory Instrument 20 (SI20), which imposed 15% value-added tax (Vat) on rice, meat, potatoes, margarine, cereals and mahewu, as there were fears that price hikes could fuel social discontent and political unrest ahead of the 2018 general elections.
By Wongai Zhangazha
The statutory instrument came into effect on February 1, raising prices of all meat products, including offals. The development sparked a public outcry among consumers, most of whom are struggling to make ends meet owing to the harsh economic climate.
The decision to introduce the tax was informed by the Finance ministry’s desperate attempt to widen the tax base, in a bid to finance the US$4,1 billion 2017 national budget.
Government sources told the Zimbabwe Independent this week that Chinamasa was pressured by ministers to shelve SI20 as they felt it would jeopardise Zanu PF’s chances of winning the next elections.
“The ministers thought SI20 was poorly thought out and detrimental to Zanu PF. They felt that this instrument would hit ordinary people — and in fact all Zimbabweans — directly in the pocket through price escalations,” a government official said. “The feeling was that this would put Zanu PF in bad light ahead of the general elections next year.
The ministers also feared that SI20 would trigger social unrest like what happened last year. The ministers also told him they were not happy with his polices which they said were designed to make Zanu PF and the government unpopular.”
Chinamasa last week told parliamentarians he had shelved implementation of SI20 to allow for further consultation.
“Following our debate and stakeholders’ representation, where concerns have been raised regarding SI20, I am proposing to shelve implementation of SI20, which levies Vat on the listed products,” Chinamasa said. “This will allow for further consultation with relevant stakeholders, and these consultations begin with parliament because I need input from the House.”
Chinamasa, however, said he had to get something to tax in order to get revenue to pay salaries and finance other activities, but MPs could be heard interjecting, saying he needed to cut down on the executive’s foreign travels.
In July last year, Chinamasa was forced to amend SI64 of 2016 after Beitbridge residents destroyed property worth thousands of dollars, including a Zimbabwe Revenue Authority warehouse, while protesting the law.
SI64 tightened screws on the importation of cooking oil, building materials, furniture and toiletries, among other goods.
The ministers also cited a number of measures which Chinamasa tried to introduce as being anti-Zanu PF and anti-government.
Last year government ministers rejected a number of austerity measures announced by Chinamasa which include closure of embassies, staff rationalisation of civil servants, the slashing of salaries and non-payment of 2016 and 2017 bonuses.
Government wages account for 91% of revenue and Treasury is currently struggling to fund capital projects. Some ministers believe if government retrenches, it will serve as confirmation that Zanu PF has failed to deliver on its 2013 election pledge to create jobs. The Zanu PF 2013 election manifesto was anchored on an ambitious pledge to create 2,2 million jobs.