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Retailers warn of price hikes as Mthuli Ncube collects rice tax

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  • Retailers have accused the Treasury of seeking to collect money at whatever cost without considering that companies needed to be nurtured post-Covid-19 lockdowns so they could flourish and contribute more in taxes.

ZIMBABWEANS should batten down the hatches over imminent price increases thanks to a controversial decree by finance minister Mthuli Ncube compelling merchants to pay Value Added Tax (VAT) on rice packages weighing 25kg or less backdating to 2017, a grouping of retailers warned Friday.

The Confederation of Zimbabwe Retailers (CZR) argues that the controversial move would have a devastating effect on the volatile economy and force many importers, wholesalers, and retailers to shut down.

“We are shocked that Ncube is plunging headlong with his views that VAT should be backdated to 2017 without looking at the ramifications such a directive would have on the economy which is slowly opening up after taking a battering from the Covid-19 pandemic,” said Denford Mutashu, president of the confederation.

Already, one dealer has been hit with a US$300,000 rice tax bill, Mutashu said, adding that “taxation should follow the four principles of fairness, certainty, convenience, and efficiency. The backdating of VAT to 2017 does not follow any of the principles.”

He accused the Treasury of seeking to collect money at whatever cost without considering that companies needed to be nurtured post-Covid-19 lockdowns so they could flourish and contribute more in taxes.

Mutashu says the Confederation of Zimbabwe Retailers is now seeking President Emmerson Mnangagwa’s intervention.

He added that while Zimbabwe has enjoyed relative price stability after the Reserve Bank of Zimbabwe (RBZ) introduced the foreign currency auction system, which decreased reliance on black market forex, the contested rice tax would trigger a lot of inflationary pressures and price instability.

“Consumers have enjoyed price stability and we fear the VAT decree will upset the applecart. The Consumer Council of Zimbabwe was recently quoted fearing a round of price increases if the government is adamant that the VAT is backdated to 2017,” Mutashu said.

“The whole rice value chain will catch a cold. Those involved in supply, distribution, and packaging will feel the heat.

“We have some members that have warned that they will close shop as they cannot bear the burden. If they were to close, the action will hurt business confidence,” he added.

The Zimbabwe National Chamber of Commerce (ZNCC) has also protested the contentious tariff, telling Ncube that it will devastate the economy and spark a wave of unnecessary price increases.

An activist Esther Zimudzi has also sued Ncube and the Zimbabwe Revenue Authority (Zimra), asking the High Court to declare the rice tax illegal.

“I have a legitimate fear and apprehension that the intended action by Zimra and Ncube… would contravene my rights to ‘administrative conduct that is lawful, prompt, efficient, reasonable, proportionate, impartial and both substantively and procedurally fair in violation of section 68 (1) of the Constitution,” Zimudzi submitted in court papers through lawyer Obey Shava. ■

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