HARARE – The cash-strapped Zimbabwean government has increased import duty for second hand vehicles, banned the importation of second hand clothing and scrapped rebates on groceries as part of measures to revive the stagnating economy.
In his mid-term fiscal presentation in Parliament yesterday, Finance minister Patrick Chinamasa revised downwards Zimbabwe’s economic growth rate from 3,1 percent to 1,5 percent due to drought-induced under-performance in agriculture.
In an effort to boost government’s dwindling coffers and reduce the country’s widening trade deficit —currently standing at $1,8 billion in the six months to June 2015 — Chinamasa introduced a raft of measures likely to negatively impact on the livelihoods of the poor.
The Treasury chief said while efforts had been made in the past to mitigate importation of second hand motor vehicles — thereby reducing the current account deficit — second hand vehicles continued to account for a significant chunk of the import bill due to their affordability.
“I, therefore, propose to increase surtax from 25 percent to 35 percent on second hand light passenger motor vehicles aged more than five years from the date of manufacture at the time of importation, with effect from September 1, 2015,” he said.
Before the increase, second hand cars used to attract customs duty and surtax at rates of 40 percent and 25 percent, respectively.
Following the massive company closures and lack of employment opportunities, most Zimbabweans had resorted to buying and selling second-hand clothes to eke out a living, but government believes that used clothing and shoes present a health hazard to the citizens, since the goods may be imported without proper fumigation.
“I, therefore, propose to remove second hand clothing and shoes from the Open General Import Licence.
“Furthermore, any future importation of second hand clothing and shoes will be liable to forfeiture and destruction,” Chinamasa said.
The banning of used clothing —commonly known as mabhero — will be effective from September 1, 2015.
Chinamasa said the measures are aimed at enhancing competitiveness of the local industry, currently facing stiff competition from cheap imports that have flooded the local market.
As part of efforts to cushion retailers from an influx of basic commodities from regional countries, government has moved to remove rebates from imported groceries.
“Cross-border travellers continue to import groceries duty-free under rebate.
“However, there is no justification for continued rampant importation, since locally manufactured products are readily available.
“I, therefore, propose to remove groceries that include maize-meal, meat, sugar and flour, among others, from the travellers’ rebate,” Chinamasa said.
Meanwhile, Zimbabwe has revised its 2015 revenue target from $3,99 billion to $3,6 billion after the country missed its first half revenue target by six percent to $1,78 billion.
Statistics from Treasury indicate that the bulk of the revenue was generated from tax revenue, which, contributed $1,646 billion or 96 percent, while non-tax revenue contributed $71,8 million or four percent of total revenue.
The major contributors to tax revenue were Value Added Tax, 25 percent; Pay As You Earn, 22,5 percent; and Excise Duty, 20,2 percent.
Customs Duty and Corporate Tax contributed 9,4 percent and 9,8 percent, respectively.