FINANCE minister Mthuli Ncube says the intermediated money transfer tax (IMTT), which is charged at 2% of all financial transactions, will remain in place despite legislators asking him to either lower it or remove it.
Local authorities have also complained that the IMTT tax erodes their revenue bases and wanted to be exempted.
Speaking in the National Assembly last Thursday, Harare East legislator Tendai Biti (Citizens Coalition for Change) called for the scrapping of the tax, saying it was punishing the poor.
“We do not need that IMTT tax. We are one of the few countries in the Sub-Saharan African region that has that tax. The IMTT punishes the small person who goes into a bank; it does not punish the rich person at the ATM [automated teller machines]. So why are you punishing the poor?” Biti said.
Ncube’s response was that government could not afford to reduce its revenue streams.
“There is also a request that there should be an exemption of local authorities from paying the IMTT tax. The Portfolio Committee on Local Government recommended that local authorities should be exempted from paying IMTT tax,” Ncube said.
“The IMTT tax has over the past years generated substantial resources that have enabled government to support various infrastructure projects, including responding to shocks such as COVID-19 and other climate shocks that the economy has experienced. The proposal to exempt local authorities will erode our revenue base, but besides, these local authorities at that level are also benefiting from the devolution budget to deal with infrastructure developments at that local level.”
He said IMTT was helping to tax the informal sector and claimed that the tax was promoting social inclusion.
Meanwhile, Ncube also told Parliament that government has been transparent in its use of the US$1 billion from the special drawing rights (SDRs).
SDRs are assets specifically created by the International Monetary Fund (IMF) to supplement the official reserves of IMF member countries.
They are not a currency, but could be converted to powerful currencies like the US dollar.
Opposition legislators Edwin Mushoriwa (CCC) and Budget and finance committee chairperson Matthew Nyashanu (Zanu PF) had demanded accountability on use of SDRs.
Ncube said Zimbabwe was the first country to produce an SDR usage report.
“On SDR usage, we have been very transparent on that. I will try to verify, but I am happy to take the credit that we are the first country to produce an SDR usage report. No one else has done it, and I presented it before this Parliament. We have been very transparent. We will put it up on our website as well,” Ncube said.
Zimbabwe received US$961 million in SDR funds from the International Monetary Fund in August last year.