CHENGETAI ZVAUYA
Treasury secretary George Guvamatanga apologised on Monday for the introduction of a 2 percent tax on electronic transactions without consultations but said it was necessary to raise revenue for the operations of Government.
Giving oral evidence before a parliamentary portfolio committee on Finance, Guvamatanga said Government would in future consult the public.
Early this month, Finance and Economic Development minister Mthuli Ncube reviewed the inter-mediated transfer tax to 2 percent per dollar for transactions above $10. Transactions above $500 000 attract a flat tax of $10 000. Before the review, the tax was 5 cents per every transaction.
“I want to apologise to the people of the 2 percent tax which we introduced with hindsight we should have consulted widely rather to take people by surprise as many were shocked by it. In future, we are going to be consulting widely on measures we intend to introduce,” he said.
Guvamatanga said government needed the money for it to continue to subsidise some projects and commodities and essential needs for the country which are used by the people. We are getting cheap electricity, fuel, maize, drugs and wheat which is being subsidised by the State and it only gets money through taxes. We cannot continue to have 4 percent of the population paying tax and yet 96 percent are not paying but they still need the services from government this is why we introduced the tax,” said Guvamatanga.
He said another reason for the introduction of the tax was because majority of the people were now operating and employed in the informal sector and were not contributing to the fiscus.
“We had to spread the tax to cover everyone and this includes the informal sector, people should know that it is the bitter pill that heals the sick and this tax is bitter medication but it is good for the development of the country,” he said.
The tax is blamed for a spike in the prices of basic commodities with industry saying it was an unnecessary burden on their operations.
