Roughly a month ago, a good friend of mine told me in one of our numerous arguments that with the way Zimbabwe’s economy is “performing”, all it may need is a money changer for a new finance minister. His argument was that money changers can hustle the economy back into the green as they usually smell a good or bad deal from afar off.
By Benson Sithole
Fast forward to now, Finance minister Mthuli Ncube is leading the country’s economic turnaround. This appointment was received with aplomb and fanfare as he was hailed as a technocrat who had experience at the highest negotiating level with the so-called big boys of world economies.
Now it’s time for the real work to begin and so far, the country has had a taste of his plans. First, it was the announcement that he will seek to remove the bond notes from circulation and have them replaced either by the United States dollars or the South African Rand as anchor currencies. This was met by severe devaluation of the bond notes and consequentially a sharp hike in prices of goods and services.
Then came the bombshell that government will be reviewing the tax charged on transactions from a mere 5c to 2c per dollar transacted. To the layman, this was good news as 2c is lower than 5c, but when reality set in, the outcry became insurmountable.
In spite all this, the Treasury department continues to say that the country should be ready for more austerity measures to rein in on the economic deterioration. Then begs the question: is the country better off with a money changer as minister or we go for a technocrat.
At face value, the new tax regime is destructive and further burdens the taxpayer who is already weighed down by other taxes like Value added tax (VAT) and Pay as you earn (PAYE), amongst others. This new tax is being seen as the strike that will break the camel’s back and bring further misery to the general populace.
Further arguments against this taxing system will even allude to the words of Winston Churchill that say:
“For a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.”
It goes without saying that no country in world history has ever managed to prosper by taxing itself out of poverty.
Ncube however, is of a different view, arguing that this tax money will be channelled towards fixing critical areas of the economy, including importation of medication and boosting the manufacturing industry. This, if carried through to the letter, will be a “necessary evil” as at the inception there will be pain for all, but later on, the economy will supposedly be back on its feet again. History is not on our side on this as if we succeed, we will become only the first country to achieve such a feat.
A lot of questions will be raised like: will the minister be given enough control on this tax money and is there political will on the part of the Zanu PF administration? We have been beaten before, but are we twice as shy yet?
Another issue we seem to be ignoring is Zidera; that draconian piece of legislation put in place by the US government in order to rein in on Zimbabwe for daring to empower its own people. In as much as it is noble for the country to reintegrate with the global family, the way is littered with thorns. The Trump administration recently signed into law the amended Zidera bill, which means more sanctions for Zimbabwe. No matter how Zimbabwe may, Zidera was passed into law in response to the land reform programme.
The US calls itself big brother and for a small country like Zimbabwe to go against the grain and seize farms from the minority whites without compensation and give to previously landless blacks is playing suicide. This, if not checked, would set a bad precedent and lead to other nations following suit. It is no coincidence that the issue of compensation for land appropriated is included in Zidera. Now the problem is Zimbabwe is trying to reintegrate yet it hasn’t dealt with the land issue to the satisfaction of the “big brother”, so all efforts may yet yield nothing. Zimbabwe now finds itself in a catch 22 situation, with nowhere to run to. Disappoint the new farm owners and accelerate reintegration or leave the status quo and the masses to continue suffering?
The above scenarios are just a tip of the iceberg as far as taking a glimpse at Zimbabwe and Ncube’s precarious positions as obtaining currently. So the major question will be on whether it’s wiser for the country to reverse the gains of the land reform or continue in the wilderness, with no help in sight. The jury is not yet out.
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