The minister of health who also doubles as the vice president of this country is on record calling for the taxation of beer and cigarettes. He says the money thus obtained would be used to fund our broken healthcare system. The truth though is that such ill-informed taxes rarely achieve their aims. For example, carbon taxes are rarely used to fight climate change.
Minister Chiwenga was speaking at a posh pre-budget seminar that was held at Victoria Falls as the guest of honour. He proposed the tax as an alternative to raising taxes on an already overtaxed populace. Zimbabweans already pay various taxes through a plethora of taxes introduced by the government over the years.
The most controversial of these is of course the famous 2% tax which is levied on all transactions above the $400 ZWL mark. The Finance Minister had all sorts of excuses and proposed uses for the tax when he introduced it but so far we haven’t had a clear accounting explaining how money raised through the tax is spent.
We also have an AIDS levy on all airtime sales, airtime tax, presumptive tax for those operating small businesses. There is of course VAT tax on selected items. Fuel is most expensive in Zimbabwe because of various taxes levied upon it.
The government needs to watch its spending
Raising taxes has clearly not improved the country’s financial position. Although we have heard the government talk of surpluses it has been at the expense of not spending enough on essentials such as healthcare. The government needs to watch how much it spends on non-productive sectors including generous loans to the agriculture sector when said loans are not repaid on time or if ever.
Speaking about agriculture, when it comes to tobacco Zimbabwe can hardly afford to introduce taxes. It’s one of our big foreign currency earners and introducing a tax might just affect local demand for cigarettes. That’s likely to have a cascading effect on prices obtained by farmers.