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Mnangagwa says new tax painful but necessary

ZIMBABWE’S President Emmerson Mnangagwa said on Monday a new tax on electronic payments was a painful but necessary part of the government’s attempts to revive the economy, his first comments since the imposition of the levy last week sparked a public outcry following the announcement on October 1.

Mnangagwa is trying to put back on track an economy that all but collapsed under the 38-year rule of Robert Mugabe.

Finance minister Mthuli Ncube said the 2 percent tax on mobile, card payments and bank transfers above $10 would be used to fund the roads, health and education sectors.

The tax will apply on mobile, card payments and bank transfers above $10 with exceptions for foreign payments and transfer of government funds. However, business and citizens objected, saying they would be paying for the government’s profligate spending.

Oil companies temporarily stopped delivering fuel because of the effect of the tax, causing shortages. Prices of some basic goods and medical drugs have shot up in the past few days.

Economic analysts said the tax would raise nearly $2bn a year. To improve the economy, the government would have ‘to take measures that are going to be painful and this is one of such measures,’ Mnangagwa said at a business meeting in Harare.

‘In our quest to leapfrog and cover the period of two decades of stagnation, these things have become necessary.’ A 388-page government economic plan issued by Ncube on Friday shows the government plans cuts in spending, borrowing and the public-service wage bill.

Zimbabwe is facing acute shortages of US dollars. The shortages have fanned a black market where the premium for dollars rose to more than 200 percent on Monday, up from 165 percent on Saturday.

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