Proposed 2024 Tax Reforms Ignite Price Increase Fears; Grain Millers Call for Review


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By DT Correspondent

GRAIN Millers Association of Zimbabwe (GMAZ) President Tafadzwa Musarara has raised concerns about the potential impact of Finance Minister Mthuli Ncube’s proposed tax regime on essential food items.

In an analysis of Ncube’s 2024 budget released by GMAZ on Wednesday, Musarara warned government that removing basic goods such as wheat flour, maize meal, sugar and salt on the Value Added Tax (VAT) exemption list could significantly hike their prices.

Musarara warned that if Ncube’s proposed budget was passed and implemented, a 15% tax burden would be passed onto consumers, most likely raising prices by the same percentage.

He warned bread, which is going for a dollar, would not however be sold at US$1.15 but US$2 because of the absence of change in US dollar denomination.

“The Tax law that existed before this budget recognized that basic food commodities such as Maize Meal, Wheat Flour, Bread, Salt, et al are critical goods needed for the sustenance of life and must be affordable to all households.

“The intention of VAT zero rating these commodities was to ensure that they remain affordable to the generality of Zimbabweans,” Musarara said.

“Bread, for example, will not only go up by 15% from the current US$1 per loaf price to circa US$1.15, but due to unavailability of US dollar coins, it will be rounded up to US$2.”

Zimbabwe faces an almost certain drought next year as a result of poor rains which are expected this farming season.

Musarara said negative impacts of Ncube’s tax regime, especially on basic goods, outweighed gains the Finance Minister was looking to record.

“Prices of maize meal, bread flour, and other previously related commodities will increase, and millers volume will slump,” he added.

“Reduction on demand will trigger slump in capacity utilisation of manufacturers that will permeate to primary production (farming of maize, wheat, soya beans), affecting contract farming investments and pricing of crops, etc.

“As indicated in the budget statement, the el nino induced drought will affect household incomes, and the removal of Zero vat rating on basic commodities is mis-timed as it is inappropriate.”

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