NAIROBI, 3 February 2017– On 1 February 2017, the 15% VAT levy extended to basic goods in Zimbabwe in a move likely to leave many Zimbabweans worse-off. The unprecedented decision by the government of Zimbabwe comes amidst decades of economic decline and stagnation; and an attempt to raise tax revenues.
The application of the 15% VAT on consumables such as meat, cereals, potatoes, and other basic goods is a move in the wrong direction according to TJN-A Deputy Executive Director, Jason Rosario Braganza. It is further evidence of how regressive tax regimes tend to impact the poorer more.
TJN-A, a Pan-African organisation whose vision is “a new Africa where tax justice prevails to contribute to an equitable, inclusive and sustainable development” say the move in Zimbabwe will further exacerbate ongoing political, economic, and climatic hardships being experienced by citizens in a country where 72% of the population live below the national poverty line.
According to the TJN-A Policy Lead on Tax and Inequality, Cephas Makunike, “This ultimately means that the poor (the majority of whom are women, children and the vulnerable groups) bear the greatest burden of the VAT or consumption tax.” In a recent think- piece, Makunike asserts the move by the Zimbabwe Revenue Authority (ZIMRA) is akin to the current wave of fiscal reform advocated for by the International Monetary Fund that uses VAT as major revenue source for government.
Braganza further added that while it is important for government to seek to raise revenue from diverse sources, the move by ZIMRA was a little strange given the significant amount of tax breaks and incentives the Governments offers foreign multinational corporation in the mining sector. He asserted that these kinds of moves only strengthen the call for more scrutiny and reform of tax systems to ensure fairer and more equitable taxation. In pursuit of fair taxation and the global fight against inequality, TJN-A, Oxfam Novib and partners, in February 2016, launched a tool called the Fair Tax Monitor (FTM) that can be used to monitor how tax regimes are either reducing or increasing global inequality.
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