HARARE,– Finance minister Patrick Chinamasa says government is considering scrapping a tax on the use of plastic money and threatened to cancel operating licences for retailers and wholesalers that do not bank cash from sales.
Chinamasa said he was considering a law to criminalise cash hoarding and which will target especially foreigners operating in businesses reserved for Zimbabweans such as retail, hairdressing salons among other sectors.
So far, he said three traders have been hauled before the courts for stashing cash.
“We recorded instances where on a daily basis some retailers received $1,5 million cash but only $35,000 is banked. They are hoarding bond notes in order to use the to buy foreign currency at the black market, and we will pass a law that any businessman who does not bank money will have his licence withdrawn,” Chinamasa said, addressing the National Assembly on Thursday.
He said so far there were only 33,000 point of sale machines in the whole country due to shortages of foreign currency to purchase them, but he said as soon as the country has enough point of sale machines, any trader including vendors that desist from using them will be prosecuted.
The Reserve Bank of Zimbabwe Financial Intelligence Unit was monitoring big traders like TM/Pick ‘N’ Pay, OK, Choppies and wholesalers like Mohammed Mussa.
Chinamasa said the Bank Use Promotions Act will be enforced to nab non compliant traders, adding he will not hesitate to craft a law soon that will criminalise businesses refusing plastic money.
Chinamasa said employment costs that chewed 93 percent of total revenue collected coupled with legacy debts that attracted interest at 40 percent of tax revenue meant that government expenditure is above government revenues.
“We live beyond our means through operating by way of Treasury Bills that translate into a bank overdraft. Government funds its employees’ salaries through electronic transfer system, (RTGS) causing a misalignment when they want to withdraw money at the bank. This is the greatest cause of queues for cash as both RBZ and banks will be required to withdraw foreign currency from nostro accounts to meet cash requirements,” he said.
Government is also under pressure to monetise Treasury Bills to physical cash, meaning that foreign currency is withdrawn from banks without corresponding foreign exchange receipts, he added.
“Government is also considering removing the 5% tax on plastic money in order to reduce the cost of transactions,” Chinamasa said.
So far, government has injected $104 million bond notes out of the $200 million Afrexim bank loan facility, he added.