Finance Minister Mthuli Ncube recently announced a national budget that introduced a raft of new tax measures. As is tradition, Parliament’s Portfolio Committee on Budget and Finance has consulted different groups, including unions and business associations, on what they think about the budget.
The committee has now released its recommendations on Mthuli’s proposals. Here, we take a look at some of the changes the MPs are asking Treasury to make on proposals ranging from taxes on betting, rentals, fast food and mining.
On that tax on chicken and chips
Mthuli Ncube proposed a 0.5% tax on fast food sales, saying it’s needed to force us to eat healthier. The MPs doubt a new tax will do that. They don’t expect a big price increase from the tax, but they see “a slowdown of business for retail outlets and restaurants, without the envisaged reduction in consumption of fast foods”.
Consumers already face many taxes, the MPs say, and the “tax is burdensome to the consumer and regressive on business”.
Going by Simbisa’s revenue in the past year, government will only raise around US$1 million from the tax.
On the betting tax
Mthuli is proposing a 10% tax on what a gambler wins. The Committee says this policy follows what has happened elsewhere; there are taxes on betting winners in Ghana and South Africa, they point out.
“Person generating income from employment and other sources are subject to personal income tax. A 10% withholding tax on betting proceeds levels the playing field between persons generating income from betting and those generating from other sources,” the Committee says.
But the MPs propose a change; instead of a flat 10% on winnings, only winnings above US$500 should be taxed. They say this is the standard elsewhere.
Ban platinum concentrate exports
Currently, mines process platinum into mattes and concentrates and export it for final refining in South Africa. Mthuli plans to impose a tax on such exports to force them to refine them into a final product in Zimbabwe.
Currently, Zimplats is working on a refinery in Selous. Miners told the MPs that the tax must be postponed to give the company time to finish the work, which has been delayed by low platinum prices globally and local issues such as power. MPs toured the plant to get a sense of the scale of work. However, they back Mthuli on the tax.
They recommended: “In view of the observed progress in the installation of the beneficiation plant, we recommend that exportation of raw PGMs and concentrate be banned. All PGM producers are encouraged to use the recently completed PGM beneficiation plant.”
Property tax
Government has proposed a 25% tax on rentals on properties that have been converted from home to commercial use. The MPs have recommended that the tax be reduced to 15%.
Sugar tax
The Committee say the sugar tax on ready-to-drink beverages should be kept at US$0.001. But they want Mthuli to exempt the first four grams of sugar per 100ml.
Informal sector: give ZIMRA more teeth, and money
To go after tax dodgers in the informal sector, Mthuli has proposed a ZIMRA campaign to register businesses in a range of trades, from hardware shops to car dealers and clothing boutiques. The MPs support this measure, and recommends that government makes “use of the existing registration databases of local authorities” to target traders. They back ZIMRA to have the power to shut down businesses that don’t comply. But they doubt ZIMRA has been given enough resources to do all the work needed to collect revenue: “This may undermine the performance of the whole Budget.”
They suggest that ZIMRA should get 3% of the net revenue it collects.
