Minister of Finance Mthuli Ncube suggests the government tax funds transferred from agencies in a bid to curb what officials describe as illegal foreign currency deals conducted via the cash-in and cash-out facility.
In his mid-term 2019 fiscal review presented last week Thursday, Ncube said most illegal transactions were being conducted through this platform in order to evade payment of tax.
In October 2018 the government introduced the intermediate money transfer tax (IMTT), also known as the ‘2c tax’. The tax is pegged at 2c per every dollar transacted as part of measures to widen the revenue base. It replaced the previous tax of five cents per transaction.
He added that while current legislation directs financial institutions to deduct intermediate money transfer tax on transactions through any means other than by cheque, mobile money transfers by agents to recipients were left out of the tax bracket.
According to the Minister, the existing regulations apply to taxation on money transfers between two persons, from one person to two or more persons – or from two or more persons to one person.
“However, cash-in and cash-out transactions conducted through mobile money transfer platforms do not fall within the above criterion hence the tax is not deductible,” said Ncube. “I, therefore, propose to levy a tax on the transfer of money from mobile money transfer agents to recipients.”
However, the fiscal review and proposition by the Minister was criticised by the National Consumer Rights Association (Nacora).
Nacora issued a statement: “The hiking of the cost of electricity and the widening of taxes on mobile money transactions, together with a raft of other inflation-driving measures, will not only burden the impoverished consumer but will also drive the costs of doing business, which cost will be passed on to the consumer.”
The Consumer Council of Zimbabwe (CCZ) weighed in and said the Minister’s actions will hit consumers hard and devaluing local currency continues to erode monthly merger salaries’ purchasing power.
CCZ chairperson Philip Bvumbe said, “… a lot of people will not be able to afford those tariff increases, which means the standard of living and welfare for consumers are being compromised almost on a daily basis.”