2% transaction tax starts bearing fruit

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The two percent transaction tax initiated in October 2018 has started bearing positive results towards addressing the budget deficit.

The budget deficit has been described by Finance and Economic Development Minister Professor Mthuli Ncube as one of the twin economic evils bedevilling the country.

According to statistics from ZIMRA, from October to December the tax collector has been surpassing its revenue targets owing to the two percent tax.

In a sign of confidence and celebration, Professor Ncube recently tweeted that he was overwhelmed by revenue collections being done by ZIMRA since October when the 2 percent transaction tax was pronounced.

Zimbabwe’s economic problems in the past have been largely attributed to lack of capacity to finance its domestic debt due to budget deficit.

However, the country is charting a new path since October when the 2 percent transaction tax was introduced with revenue collection surpassing the targets month on month.

The US$332 million target for October was exceeded by 35 percent as US$449 million was collected.

In November, US$338 million was the target, but US$498 million was collected, representing a surplus of 47 percent.

In the first 28 days of December, US$632 million was collected exceeding the target of US$443 million by 43 percent.

This figure will rise as the last three days of December have not yet been included.

If this trend is sustained into the coming year, it means the formula to deal with the domestic debt would have been found and this will enable monetary authorities to put other economic fundamentals in place that might see the realisation of a middle income status sooner than later.