The high court ruled in favour of the removal of the 2% Tax imposed on all electronic transfers which was enacted by the Minister of Finance and Economic Development Mthuli Ncube, under Statutory Instrument (SI 205/2018), which came into effect on the 12th of October 2018.
The tax was challenged by Mfundo Mlilo, who is the director of the Combined Harare Resident’s Association, who had his argument based on basis that, the constitution does not allow the government to repeal sections of an act of Parliament without being debated and passed by the National Assembly
Mfundo said the minister of finance overrode the demands of the parliament and forged ahead in effecting the electronic transfer tax.
As such the enactment of the tax was declared unconstitutionally and illegally by the court.
Mlilo was represented by Lawyer Tendai Biti a member of parliament and former Finance minister in the inclusive government.
However Minister of Finance and Economic Development released a press release yesterday nullifying the court judgment based on the basis that the 2% tax was later passed by Parliament under the Finance Act No. 1 of 2019 on August 21.
“The attorney general has brought to my attention the judgment on SI 205/2018 pertaining to the collection of intermediated money transfer tax,” said Ncube.
“That judgment will not affect the collection and levy of the intermediate money transfer Tax because the collection of the Tax under that statutory instrument 205/2018 was subsequently invalidated by parliament under the Finance Act No. 1 of 2019,” added Ncube
As such Zimbabweans will continue to be taxed on all electronic Transfer despite the judgment by the court declaring the Tax unlawful.
“Consequently the 2% Tax will continue to be levied,” said Ncube.
The 2% tax has been widely criticised by the citizens of Zimbabwe arguing that they are being over taxed by the government.
The impact of the 2% tax upon its enactment was the souring in prices of goods and services and the increased costs of business transactions, the electronic transfer has to date been the governments’ major revenue earner.
The Zimbabwe Revenue Authority (Zimra) noted that by mid-year 2019, the 2% tax had yielded close to $100 million per month. According to the Reserve bank of Zimbabwe, by January, Government had collected a sum of $166 million due to the 2% tax which came into effect in October 2018,
Former minister of Higher and Tertiary Education Jonathan Moyo noted that the parliament had validated the 2% tax which was already invalid.
“The nullification of his Mthuli percent by the High Court today is itself a nullity as SI 205 of 2018 was subsequently validated by Parliament under the Finance Act No.1 of 2019. But how can Parliament validate a nullity? Getting something from nothing!,” said Moyo.
Biti acknowledged that although they won the case at court, the 2% tax was there to stay without any impediments.
“It seems the 2 percent is not going anywhere as what has been set aside is the Statutory Instrument 205 of 2018 which introduced the 2 percent tax, but currently the 2 percent tax is based on the Finance Act passed on August 2019, hence ngoma ndiyo, ndiyo (it’s still on) ,” said Biti.
SADC News Zimbabwe Correspondent
Koketso Ramorei is a journalist and news editor of SADC News with years of experience in a number of genres including sports, politics and community reporting. He has worked for a numerous publications including The Citizen Newspaper and is a former editor of a Johannesburg-based off-campus publication called The Waldorfian Times.