News of the South HARARE – The move by Government to hike electronic money transfer tax from five cents per transaction to two cents per dollar transacted has invited massive criticism with some regarding it as a bad move targeting forex dealers.
The new tax was announced by Finance and Economic Development Minister Professor Mthuli Ncube yesterday as part of the fiscal measures to expand the tax base and address the economic challenges facing the nation.
“There is need to increase the tax base as it is vital to revenue collections. Electronic transactions for the year to date are $1.7 billion, an indication that the review will be useful to address the challenges currently bedevilling the country.
“We reviewed the issue and it will be two cents for every dollar transacted effective from today (Monday 1 October),” said Prof Ncube.
Economic analysts however, criticised this stance saying it increases the burden on ordinary citizens who are already struggling to survive and most of them feed from hand to mouth.
Red flags have also been raised saying that this will result in an increase of foreign currency prices on the parallel market.
“Foreign currency dealers, who are moving millions daily through the RTGS system seem to be the target. Government hopes this ‘bold move’ will hit cash dealers hard, but the strategy is poorly considered- foreign currency dealers will simply pass on this cost meaning the rate will go up,” said an analyst who chose to remain anonymous.
“If anything, the tax is the final nail in the RTGS coffin. Every dollar in the RTGS system has just been discounted by 2%, this will make the US Dollar cash much more attractive and thus increase demand for it. Again the rate will simply go up.”
According to the International Monetary Fund, Zimbabwe is one of the highest taxed economies and this move is regarded as a non-remedy.
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