Two percent tax reduces budget deficit: ED

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President Mnangagwa says government has set aside $310 million to be disbursed to provinces to aid the devolution process.
President Emmerson Mnangagwa

Harare – President Emmerson Mnangagwa has said the two percent transactional tax on electronic transfers is here to stay as it has gone a long way in reducing the country’s budget deficit.

Addressing delegates on Thursday, at the third Annual Public Sector Audit Conference and Financial Management Awards Mnangagwa said Finance and Economic Development minister Mthuli Ncube will announce more reviews made on the tax during his budget statement.

He said the Ministry of Finance is set to announce its budget before the end of the month.

“The ministry of finance will be making an announcement very soon, I think before the end of the month he is going to make a budget statement.

“I can safely say he will also look at that (two percent  tax) in order to improve, he is going to speak about it, have a conversation around it,” he said.

The treasury report for June showed the country’s fiscal deficit grew after government spending increased in the run up to the 2018 harmonised elections.

The finance ministry reviewed Intermediated Money Transfer Tax from five cents per transaction to two cents per dollar transacted, effective from October 1 this year.

This was announced in Ncube’s recent monetary policy statement and was met with strong objections from the general public, workers’ unions and activist.

Since the introduction of this tax Zimbabweans have been up in arms with the government for overburdening them with tax, much of which ends up being spent on non-priority areas.

However, Mnangagwa insisted that it was a worthy pain the road to economic recovery.