Zncc GDP growth projections
The Zimbabwe National Chamber of Commerce (ZNCC) that represents over 7 000 business entities countrywide, says Finance and Economic Development Minister Professor Mthuli Ncube should use the mid-term budget review this week on Thursday to include tax relief measures under the Government’s $18 billion economic recovery and stimulus package.
President Mnangagwa announced the bailout package on May 1, 2020 aimed at reinvigorating the economy and providing relief to individuals, families, small businesses and industries impacted by the economic slowdown caused by the coronavirus pandemic and measures taken by the Government to contain the disease.
Analysts now expect the domestic economy, which declined by an estimated 6,5 percent according to the Ministry of Finance and Economic Development, to shrink by about 15 percent due to the impact of the coronavirus global pandemic.
In its recent forecast, the World Bank projected Zimbabwe’s economy might contract by 10 percent from the initial growth forecast of 2,7 percent. Zimbabwe is nearing about 1000 positive cases of the coronavirus, which has shuttered global economies and led to millions of job losses and poverty and nine deaths.
It is expected that the deadly viral disease will turn upside down minister Mthuli’s initial growth projection of 3 percent this year, which he announced late last year in the 2020 national budget, to a decline.
Coronavirus came as the economy already faced numerous headwinds including low commodity prices, shortage of power and foreign currency, high operating costs, exchange rate volatility, high cost of utilities and expensive and short-term funding constraints.
“The chamber acknowledges that the stimulus package will go a long way in ensuring that industry is resuscitated as this will help in providing resources for potential rebound opportunities given the Covid-19 pandemic negative impact on sectors of the economy,” ZNCC said.
The business lobby said the funds under the recovery and stimulus package should be easy to access and should not come from printing money, have a grace period of at least five months and clear timelines for its disbursement to be effective.
But ZNCC said in order to be effective, Minister Ncube should consider a cocktail of tax relief measures that should cover value added tax, payment dates for individual tax and VAT, review of taxable amounts under intermediated money transfer tax, relook the tax free threshold and retain duty on cigarettes.
However, ZNCC said the ad valorem excise rate should be maintained at 20 percent of the taxable amount, while the specific exercise component should be hiked from $100 per mille to $160, subject review again in November.
ZNCC proposed that outstanding VAT refunds be cleared, VAT rate cut from 14,5 percent to 13,5, PAYE dates moved to 25th and VAT to 15th of each month, corporate tax reduced to 20 from 24 percent, tax free income band raised to $6 000 and IMTT threshold increased from $2 000 to $6 000.
On IMTT, ZNCC said the allocable amount should remain at $1,250 million and the attendant tax should also stay unchanged at $25 000.
“There is a need to revise the corporate tax rate from 24 percent to 20 percent. This will enable businesses/companies to have funds, which can be invested back to the businesses to boost the working capital in order to sustain businesses,” ZNCC said.
The chamber has also implored Treasury to make provisions for businesses that have been hard hit by the Covid-19 pandemic to apply for import duty exemptions when importing critical raw materials.
“There is (also) need to standardize the mining sector levies and other penalties across the country and not have a model where levies differ depending on the location of the mine, local by-laws by local authorities in the region of operations.”
In addition, ZNCC has implored the Government to consider proper and expedited privatisation models for ZUPCO, Air Zimbabwe and Zisco saying the processes should be credible, transparent and mutually beneficial to all the parties.