FINANCE and Economic Development Minister Mthuli Ncube says the Intermediated Money Transfer Tax will not be scrapped anytime soon because it helps the government to bankroll capital projects, cushion civil servants and support the retooling of diverse economic sectors.

“We will not scrap the 2 percent tax because it helps us on the compliance front, in terms of lowering tax. I cannot pre-announce what I will say in the budget, all I can say generally is we want to support growth and productivity.

“One of the things we have to look at is obviously incentives and tax adjustments,” said Minister
Ncube.

The Intermediated Money Transfer Tax is commonly known as the 2% tax and came into effect on October 13, 2018 after it was gazetted in Statutory Instrument 205 of 2018.

Industry players, notably the Confederation of the Zimbabwe Industries and the Zimbabwe National Chamber of Commerce, have voiced their concern on the transaction tax, saying it increases the cost of doing business.

Recently, High Court Judge Justice Happias Zhou ruled the tax illegal, but his judgment had no material effect since there is now a Finance Act, which provides for the contested tax, passed on August 21.

Treasury chiefs argue that the tax has enabled government meet unforeseen disasters such as cyclone Idai in February this year, the current drought as well as providing a cushion to civil servants whose salaries are constantly being eroded by inflation.

Mthuli Ncube also argues that the public in general has benefitted from Zupco buses which have been acquired using proceeds from the tax.

Critics however argue that apart from increasing the cost of doing business and lowering demand, the tax punishes the poor who already bear much of the brunt of the Government’s austerity programs.

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