Finance and Economic Development Minister Professor Mthuli Ncube says the Government will continue doing the right thing even when it’s not popular,saying the Intermediated Money Transfer Tax (IMTT), popularly referred to as 2 percent, has enabled Government to attend expeditiously to the Cyclone Idai disaster and critical infrastructural work without resorting to borrowing as the case previously.
Writing in his weekly column Professor Ncube said that Government had managed to provide a 10th of the $1 billion required to cater for non-infrastructure supplies as well as quick infrastructure rehabilitation of roads and bridges, power, communication, irrigation, housing and water and the dualisation of Norton strip of the Harare-Bulawayo Highway.
The Norton strip is expected to be opened by President Mnangagwa soon after the completion of the construction of a road over rail bridge along the same stretch, which is underway.
“From a governmental perspective, Cyclone Idai necessitated an urgent and immediate need for resource mobilisation to mitigate against its effects and support those affected. In the past, this would have meant further government borrowing, leading to extra debt and long term economic ramifications,” he said.
“In the past, this would have meant further government borrowing, leading to extra debt and long term economic ramifications. But fortunately, funds from the 2 percent tax that were put aside for exactly this eventuality, and became available exactly when they were most needed.
We had initially earmarked $50 million to cover the emergency requirements for mitigating the impact of such a disaster, yet due to the increased performance of the fund, we were able to increase this allocation to a much needed $100 million. These funds are being used to help those who most in need of our help.” Professor Ncube said while the 2 percent levy had been handy in assisting Government to attend to pressing needs the magnitude of the Cyclone Idai disaster and the work that is still outstanding had raised the need for need for long term economic planning and sobriety, even if it is unpopular.
“There is so much more to do to mitigate the impact of Cyclone Idai, and this sum we have put aside amounts to around one tenth of the estimated one billion dollars we require to cater for non-infrastructure supplies as well as quick infrastructure rehabilitation of roads and bridges, power, communication, irrigation, housing and water.
The scale of the need will require the coordination and support of public, private and development partners, and while we greatly appreciate all the support we have already received, much more is needed.
“But what Cyclone Idai has done is to reaffirm the need for long term economic planning and sobriety, even if it is unpopular.
Nobody likes to be asked to pay more taxes, certainly not those who are already struggling to make ends meet. We are aware of this, and are doing all we can to spread the burden evenly, and minimise what we ask for from those who have the least.
“But in just six months, the 2 percent tax has helped us to cut the deficit, invest in vital infrastructure, and put aside a sizeable sum that is being used to mitigate the effects of Cyclone Idai. Simply put, the 2 percent tax enables us to help those desperately in need of our assistance. Whatever your politics, whether popular or not, it is the right thing to do.”
Professor Ncube said this was their guiding principle when they were considering introducing the 2 percent tax.
“We knew that the actions we needed to take would not necessarily make us popular, but they were necessary nonetheless. I was comforted in this realisation by the wise words of Albert Einstein, who famously wrote that “What is right is not always popular and what is popular is not always right.” Apart from assisting Government to meet critical needs the 2 percent tax, which was introduced in October last year, has resulted in tax performance exceeding all expectations, and to date, $449 million collected.
This has helped to cut the monthly budget, for example from a US$242 million deficit in November to a surplus of US$733 million in December.
Source : The Herald