The issue was discussed on Tuesday in the National Assembly during debate on clause 25 of the Finance (No 3) 2019 Bill, after Dzivarasekwa MP Edwin Mushoriwa (MDC Alliance) questioned why more duty was levied on new imported vehicles and less on old ones without taking into consideration the impact on the environment.
Clause 25 of the Finance (No 3) 2019 Bill states the Zimbabwe dollar rates of special excise duty on second-hand motor vehicles, which will take effect from January 1, 2020.
For example, an imported second-hand vehicle with a lifespan of zero to four years and an engine capacity of up to 1 000cc will pay excise duty of $3 000; five to 10 years and engine capacity of 1 000cc ($1 500); 11 to 15 years with engine capacity of 1 000cc ($750); and over 20 years all engine capacities ($500).
Mushoriwa added that Zimbabwe should consider setting up its own manufacturing plants.
“Minister (Finance, Mthuli Ncube), why should we reward a person who wants to import a vehicle which is more than 20 years and we punish a person that wants to import a vehicle which is less than five years? I thought the Hon Minister was going to simply say any vehicle which is more than 10 years has to be charged high excise duty,” Mushoriwa said.
“So what it means is that the best way to buy cars is for people to go to Japan and get vehicles which are 20 to 25 years old and put them into the market and they end up flooding the market. They only have to pay US$500; you are not putting into consideration the issue of the environmental impact,” he said.
Chegutu West MP Dextor Nduna (Zanu PF) said government should not curtail people’s choice of vehicles.
“To then force the ordinary Zimbabwean to buy brand new vehicles is out of this world. I applaud the minister for not trying to (stop) the ex-Japanese vehicles from getting into the country,” Nduna said.
Ncube said in coming up with the Zimdollar duty charges for imported vehicles, government converted the old United States dollar rates using a factor of eight to the current rate.
“That is way below the inter-bank rate of 15. So these are not high at all and these are in Zimbabwe dollars. This is simply an issue of excise duty in terms of livelihoods in line with the size of the engine capacity and the number of years,” he said.
The Treasury boss said duty was meant to be progressive rather than regressive, and that is why it was lower as the age of the vehicle goes higher.
“We are not trying to necessarily restrict the old vehicles over new vehicles. The intention rather is to recognise the remaining life and making sure the excise duty is progressive enough. Those with newer cars pay more because of longer shelf life and those with older cars pay less. That is how we have designed it and we think it is fair to design it that way,” he said.