‘150% duty for second-hand vehicles’

Speaker of the National Assembly Jacob Mudenda speaks at the Zimra parliamentarians workshop at Rainbow Towers Hotel yesterday

SPEAKER of the National Assembly Jacob Mudenda wants the Zimbabwe Revenue Authority (Zimra) to charge 150% in customs duty on second-hand vehicles, claiming Zimbabwe has become Japan’s largest warehouse of used cars.


Speaker of the National Assembly Jacob Mudenda speaks at the Zimra parliamentarians workshop at Rainbow Towers Hotel yesterday

Speaking at a Zimra and parliamentarians workshop in Harare yesterday, Mudenda said the tax collector had the muscle to charge that kind of tax, since car importers were siphoning the much needed foreign currency.

“You have muscle. Look at all used vehicles that have been coming into the country, taking foreign currency to bring in second-hand vehicles that are parked all over the country,” he said.

“Every corner of Harare, you see these parked vehicles — that is parked foreign currency that has been allowed to go out.

“What is stopping Zimra from saying ‘if you bring [in] a second-hand vehicle, you pay 120%, 150% of the value of that vehicle in foreign currency?’”

Mudenda said hiking the customs tax on second-hand vehicles would help widen Zimra’s tax net.

“So what went out whether illegally or formally, as they come in, charge them 150% customs duty, you will recover your money, you will recover Zimbabwe’s foreign currency.

“And for the Japanese, Zimbabwe has become a very big warehouse of second-hand vehicles and after 20 years, where will they get the spare parts from?”

Zimra is currently charging up to 96% duty for used car imports.

Used cars make a huge portion of the 1,2 million vehicles that are estimated to be in the country according to 2016 statistics from Zimbabwe National Road Administration.

According to official reports, the first half of 2016 saw $250 million worth of second-hand cars imported into the country, which was down from $365 million in the previous year.

As at August 2016, 42 000 second-hand vehicles were estimated to have been imported.

Mudenda said Zimra also needed to focus on small to medium enterprises (SMEs) to widen the tax base, as the informal sector had a reported $5 billion circulating.

“What is needed is to kill that disease of inertia, it must be killed,” he said.

“Let us learn from Rwanda. Now, the International Labour Organisation (ILO), working with Brazil and Columbia came up with recommendation 204, published in June 2015 transition from informality to formality.

“They put guidelines. It [ILO recommendation] is there, Google it and see how government, business and labour have come together with practical suggestions on how to increase the tax base on informalisation.”

One of the findings in the 2015 ILO report was that one way to formalise the informal sector was to address negative aspects through protection and incorporation into the mainstream economy, while preserving the informal sector’s job creation and income-generating potential.

Zimra board chairperson, Willia Bonyongwe said a key requirement in expanding the tax net was to inculcate a culture of voluntary tax compliance. – NewsDay