HARARE – Professor Mthuli Ncube defended the payment of import duties in foreign currency in his statement on the 2019 state budget, saying the measure is based on the principle of ability to pay.
Professor Ncube said the number of imported vehicles has increased by 700,000 over the past 12 months and there is a need to curb the import system with foreign currency in short supply.
He said so in the National Assembly while responding to several concerns from backbenchers who argued that it was wrong to impose hard currency tariffs on people who did not earn foreign currency.
Harare East legislator Tendai Biti (MDC Alliance) had also pointed out that collecting customs duties only in hard currency would be illegal as the bonds were also legal tender.
“This measure is based on the principle of efficiency. A person needs foreign currency to import, so the source of foreign currency to import may also be the source of foreign currency to settle the customs requisition component. This brings out the element of solvency.
“It should also be noted that this proposed measure is a demand management mechanism aimed at reducing the propensity to import using scarce currency resources,” Professor Ncube said.
“I have to add that Zimbabwe has around 1.7 million cars and in the last 12 months we have had an increase of 700,000 cars in just one year, that’s a huge increase, it’s increasing the demand for fuel .”
Professor Ncube also dismissed claims that the introduction of the excise tax was inflationary.
“The proposed fuel excise duty revision is not expected to have a significant impact on price levels as international oil prices have fallen and therefore primarily provide leverage against inflationary pressures.
“The current prices at the pump prove it. Retail prices are lower than before the excise tax hike, on the contrary they have fallen,” Ncube said.
He said the government would carry over $310 million from the temporary 2% tax on cash transfers to support decentralization and social services like education and health.
“We take people’s money and give it back to them by ensuring decentralization. We have committed US$310 million and the allocation to provinces and districts is determined by population and size, among other factors,” Professor Ncube said.
He said the Treasury released $30 million this month to clear arrears in the basic education aid module (BEAM). The total debt was $92 million.
Professor Ncube has defended the increase in road traffic fines, saying the Penal Code Reform Bill gives him the power to do so with the approval of the Minister for Justice, Law and Parliamentary Affairs.
“In light of the above, the review of the level of fines was within the legal framework and should therefore not be seen as interfering with the role of judges and magistrates in convicting individuals or determining sentences” , said Professor Ncube.