HARARE – The government must follow up on its recent decision to suspend the implementation of Statutory Instrument 20 (SI 20), which imposed 15 percent value added tax (Vat) on rice, meat, potatoes, margarine, cereals and maheu, by ensuring retailers reduce their prices.
Over the past few weeks, retailers have been hiking basic food prices to unprecedented levels, resulting in a 2kg chicken costing an average of $8,20 compared to $5,49 in early January while beef prices were hiked to over $7 per kg.
While we understand that the country’s purse is heavily depleted and the broke Zanu PF government is eager to tax anything under the sun to boost its coffers, we applaud the decision by Finance minister Patrick Chinamasa to remove Vat on basic commodities.
Chinamasa noted that concerns were raised during debate and stakeholders’ representation, leading to government shelving the implementation of SI 20.
Further consultation with relevant stakeholders — beginning with Parliament — will continue, the minister said in the august House on Tuesday.
The Finance minister, however, said he had to get something to tax in order to get revenue to pay salaries and finance other economic activities.
We are glad Chinamasa has listened to people’s pleas and has done the right thing by scraping the draconian tax instrument, which was slowly condemning millions of Zimbabwe’s poor to starvation.
SI 20, which came into effect on February 1, was very diabolical in nature as it came against the background of growing poverty levels as well as high unemployment instigated by massive company closures.
A 15 percent increase in basic food prices meant families — for long living below the poverty datum line — were now being forced to find substitutes of low nutritional value and substandard quality.
The Daily News strongly and rightly argued for the lowering of taxes on basic consumables and thus push aggregate demand which would create fiscal space in the economy instead of punishing the poor by trying to convert them into vegetarians.
With the latest development, we now call upon the Zanu PF-led government and the National Pricing and Income Commission to monitor and enforce compliance with retailers who are generally bent on profiteering at the expense of the masses.
What Zimbabwean retailers fail to understand is that although price reductions are often associated with margin degradation and profit loss — and some companies believe that cutting prices for their products could negatively impact their brand image — markdowns are a necessary evil designed to boost sales.