Fresh calls to scrap 2% transfer tax

16 Sep 2022

There have been fresh calls to scrap Zimbabwe’s 2% intermediated money transfer tax (IMMT) by non-governmental organisation, Fight Inequality Alliance-Zimbabwe.

Under the IMMT, a two cents per Dollar tax is added to transactions between $10 and $500,000 in order to hike revenues and lower government borrowing, specifically via the issuance of Treasury Bills and a Reserve Bank of Zimbabwe (RBZ) overdraft facility.

According to Fight Inequality Alliance-Zimbabwe, the tax isn’t fair to the poor: “Zimbabweans are suffering from a regressive tax system considering the 2% intermediated money transfer tax is currently the highest charge on electronic transactions in Africa.

“Despite the tightening economic living conditions for ordinary citizens, the tax-free threshold for the 2% currently sits at $2,500, is insignificant with regards to cushioning the poor as for instance 2 litres of cooking oil is priced at an average of $4,000 so by purchasing this one item electronically, one is already liable for the 2% tax. Fair taxation should tax the rich more and support the poor. The 2% blanket tax is not fair and should be dropped,” the organisation added.

According to an analysis on tax by the Zimbabwe Coalition on Debt and Development, citizens throughout the country are experiencing high taxes, NewsDay reports, with the Zimbabwe Revenue Authority continuing to exceed targets, despite weak economic activity.

“For Zimbabwe, the opposite is the case as the rising tax collections trigger the rising cost of living and continued price increases for basic goods and services. The government is failing to cushion vulnerable groups from the devastating impacts of the COVID-19 pandemic,” said a statement by the debt organisation.

“Apart from value erosion through depreciation, indications are that collected revenues are being abused, misused, misappropriated, and diverted for private gain by public officials. This is evidenced by the findings of the auditor-general reports for 2019 that showed a lack of transparency in government.”