Zimbabwean Gives Govt 14 Days to Drop ‘Unconstitutional’ Money Transfer Tax

Zimbabwe's new finance minister said he would accelerate plans to pay arrears to the World Bank and the African Development Bank. Picture: Reuters/Philimon Bulawayo

HARARE — A Zimbabwean businessman, irked by the recent tax increase in electronic money transfers, says he will challenge the constitutionality of the move if government doesn’t reverse it within the next 14 days.

Arnold Mutsondi, who runs a number of companies, said hiking of the Intermediated Money Transfer Tax rate which was introduced as a form of tax under the Finance Act IN 2003, is unlawful, unfair, unreasonable and unjustifiable in a democratic society.

His lawyer, Alex Majachani, said his client is of the view that the tax violates some provisions of Zimbabwe’s constitution as Finance Minister Mthuli Ncube arbitrarily increased the tax without any public consultations.

He said his client will take the matter to the Constitutional Court if it is not reversed.

In a letter addressed to the Ministry of Finance and Economic Development, Majachani said, “It is an undeniable fact that the purported review of the Intermediated Money Transfer Tax which resulted in an exorbitant, usurious and exponential rate of 2 cents per every dollar is unconstitutional in terms of Section 71 (3) of the Constitution of the Republic of Zimbabwe which clearly prohibits the deprivation of property. The Constitution provides, inter alia in Section 71 (2) that every person has a right to property which includes money.

“It is our client’s fortified view that the move by your esteemed Ministry to arbitrarily impose an exponential tax on its transactions or those of fellow Zimbabweans cannot be accepted in a democratic society. Our client’s views are buttressed in the provisions of the Constitution.”

Majachani said there was no reasonable notice given by the Ministry of Finance before the operationalization of the tax as required under Section 71 (3)(c)(1) of the Constitution.

“Whilst the levying of the tax is permissible in terms of Section 71 (3) on the basis of a law of general application, Section 71 (3) © (i) required reasonable notice to have been given by the Ministry considering the far reaching implications of the tax rate in question. The fact that the Ministry purported to operationalize the usurious tax effectively on the 1st of October 2018 renders the actions by your Ministry unlawful …”

Majachani said the tax increase is set to devastate Zimbabweans facing serious cash shortages.

According to Zimbabwe’s Finance Minister, the upward tax review was necessitated by the informalization of the economy and huge increase in electronic and mobile phone-based transactions and RTGS transactions which amounted to 1.7 billion this year.

The Intermediated Money Transfer Tax was reviewed from 5 cents per transaction to 2 cents per dollar transacted, with effect from October 1, 2018.

But Zanu PF Central Committee member, Believe Gaule, said the government has increased the electronic money transfer tax in an effort to revive the ailing economy.