Government to earn $300bln from VAT

15

FINANCE minister Mthuli Ncube says the country’s move to raise value added tax (VAT) to 15 percent from 14,5 percent starting next month will generate $300 billion that will fund at least five ministries.
Ncube told a post-budget review meeting organised by the Confederation of Zimbabwe Retailers that VAT was still low compared to the region, which averages 16 percent.

“VAT is only a half percent increase and is going to finance five ministries. That is $300 billion,” he said.
He said the VAT was an important levy to the government.

“So, by allowing us to take an extra half percent from when you buy from the shops, you have really capacitated the government to finance five ministries.”
The government is targeting $3,9 trillion in 2023, a 125 percent increase from the projected final outturn in 2022. For expenditures, the government set the target at $4,2 trillion, up 98 percent from the projected final outturn of the current fiscal year.

The targets leave the government with a projected fiscal deficit of $336,9 billion, which will trim the projected 2022 deficit by 18 percent.
The government depends on fuel tax, VAT and Intermediated Money Transfer Tax in terms of revenue collection as they cover everyone through a multiplier effect.
“This year, because of the geopolitical tension in Europe, which has seen an increase in oil prices, we have used these fuel taxes to the benefit of citizens literally as a stabilisation fund; our maximum rate is 12,7 cents a litre,” he said.

“On the contrary, this year, the government has not made a lot of money from this fuel tax, but it is not a tax that we can abandon.
“In September this year we had the highest consumption of fuel, almost 192 million litres in an environment where fuel prices are going up, which just shows you the economy is growing,” he said.

“In October, we had the second highest at around 135 million litres of fuel consumption, demonstrating that the economy is growing,” he added.
The economy is now projected to grow by 4 percent in 2022, a further downward revision from the mid-year projection of 4,6 percent, while in 2023 it is poised to grow by 3,8 percent.
newsdesk@fingaz.co.zw