Consumers’ rights organisations and economists have slammed the recent introduction of a 15% value added tax (VAT) on meat and cereals, saying the move worsened Zimbabweans’ already desperate situation.
BY CHARLES LAITON/KENNEDY NYAVAYA
Finance minister Patrick Chinamasa last week announced the implementation of Statutory Instrument 20 of 2017, which saw VAT being charged on meat and meat products and also cereals as one of the many measures government was implementing to raise about $3 billion to finance government operations in the face of dwindling revenue collection.
The new tax regime saw the price of meat shooting up to a minimum of $4,50 for the lowest grade per kg, up from around $3,80, according to a survey conducted in Harare by this paper.
Zimbabwe Consumer Council of Zimbabwe executive director Roselyn Siyachitema said there had been gradual increases on prices of basic commodities since last November and the latest move would be a blow to the already overburdened consumers.
“Government is not paying bonuses to its workers yet it increases the price of meat. This is not a good start of the year,” Siyachitema said.
“Consumers are going to be burdened as they have nowhere to run because even fish products have gone up.”
Siyachitema said she was also concerned by the gradual rise in fuel prices, that are exerting a domino effect on the prices of all basic goods.
“Consumers are the hardest hit because the retailers are passing the cost to them,” she said.
“Fuel has been going up and council now says it wants to introduce urban tollgates, all eating into the pocket of the consumers.”
Economists said the move by government to introduce the 15% VAT on meat would not achieve the intended results, but would instead backfire on government.
A local economist, John Robertson said the tax would have a negative effect on the consumer’s buying power and at the same time boost the informal sector rather than government.
“The VAT increase will have a very bad effect on the consumers buying power but since most of the supplies are available on the informal sector, the move will defeat government’s purpose of the increase,” Robertson said.
“Most meat will not be channelled to big supermarkets as has been the case but will be available in the informal sector where VAT does not apply.
“Consumers will resort to buying live chickens on the informal sector as opposed to the dressed ones in shops and by so doing, government will lose the revenue they have been collecting.”
Another economist Prosper Chitambara echoed the same sentiments, saying the tax regime would increase the cost of living for ordinary Zimbabweans.
“There is obviously going to be a decline in the consumption of the affected goods, which will result in the decrease of the revenue collection by the government since Zimbabweans are now overburdened,” Chitambara said.
“The increase in VAT will also see the increase in the cost of production, cost of living and a reduction in the consumers’ incomes.
“It’s so sad that Zimbabwe is now in the second spot in Southern Africa in terms of the tax burden.
Meanwhile, Harare residents have expressed concern over the increases in prices for on basic commodities.
“We are suffering already but the government just decides to make us suffer more.
“The truth of the matter is, as ordinary consumers, we will now be unable to buy meat for the family. It is a shameful move which I think the government should revisit before it’s too late,” Mbare resident Adha Banda said.
Another resident who only identified himself as Tatenda from Chishawasha, said government’s decision was regrettable.
He said he had already been struggling to buy meat for his four children before the price increase.
“We are forced to live with this sad reality where our children must live on cabbage because we can no longer afford meat,” he said.
Esther from Kuwadzana said the decision would force many citizens into becoming vegetarians.
“Our salaries are not even enough as we speak and with the cash crisis already a burden, our children will get malnourished as a result of eating only vegetables,” she said.
The government’s tax collector — the Zimbabwe Revenue Authority — last year missed its collection target by $145 million and this was attributed to the declining economy as demonstrated by the massive closure of companies.
President Robert Mugabe’s government is increasingly finding it difficult to meet its financial obligations and is struggling to raise civil servants’ salaries.