Retailers yet to review prices despite VAT ‘suspension’

THE 15% value-added tax (VAT) introduced by the government recently on all meat products and cereals is still effective despite Finance minister Patrick Chinamasa claiming to have suspended it, business officials have said.


Patrick Chinamasa

Patrick Chinamasa

The government recently imposed a 15% VAT on all meat products and cereals under Statutory Instrument 20 of 2017, a move that triggered a sharp increase in the prices of most basic foodstuffs, as retailers passed on the cost to end users.

Following an outcry triggered by the VAT, Chinamasa last week told parliamentarians that he had suspended the tax.

A survey conducted by NewsDay last week revealed that prices of basic commodities like cooking oil and beef among others were still up and inclusive of the VAT.

Business and industry officials said the VAT was still effective, as Zimbabwe Revenue Authority (Zimra) has not yet reversed it.

“The reversal has not filtered down to action by Zimra on guidance on what will happen to invoices on which VAT was charged,” Confederation of Zimbabwe Industries president, Busisa Moyo, said.

Retailers Association of Bulawayo secretary-general, Simba Phiri, echoed similar sentiments.

“I went to a shop and found out that prices of basic commodities were still up despite the government having suspended the SI 20 of 2017. I asked the retailers and they said they could not reduce the prices because the suppliers have not complied,” he said.

“They are also asking who will compensate them, since they ordered the stock when the VAT was introduced. The retailers are suffering. The other thing also, is that the 15% VAT is still effective in the system.”

Phiri believed that there were no wide consultations on the matter.

Consumer Council of Zimbabwe Bulawayo regional manager, Comfort Muchekeza said retailers should not take consumers for granted, as the two needed each other.

“Retailers are still maintaining the same prices despite the VAT having been suspended. When it comes to increasing the prices, retailers do it with immediate effect, but when it’s the other way round, they take time. They should always know that there is no retailer without a consumer,” he said.

Muchekeza said the government should have consulted first before implementing the policy, as it had catastrophic effects on consumers.

A commentator, Reginald Shoko said government should seek other means of getting revenue and should streamline its operations.

“A bloated Cabinet and civil service is not necessary. People are already strained by economic challenges,” he said.

Shoko said it would take time for retailers to reduce their prices, and there was serious need for monitoring.

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