SUSPENSION of Statutory Instrument 20 of 2017 which imposed a 15 percent Value Added Tax (VAT) on basic consumer goods, while a welcome development, has not produced the desired results as retailers maintain high prices beyond the reach of consumers.
Retailers are resisting calls to revert to prices charged before the VAT increase.
The suspended tax was proposed in the 2017 National Budget and had been imposed on rice, margarine, cereals, maheu, potatoes as well as meat (pork, beef, fish and chicken) with effect from last month.
Most retailers and suppliers increased prices of the affected commodities by margins of up to 40 percent soon after the introduction of the new tax, triggering an outcry from consumers.
A snap survey carried out by Patriot Business in major retail outlets in both Harare and Bulawayo showed that most supermarkets were yet to revert to old prices.
A 2kg portion of chicken cutlets still costs between US$7,70 and US$8,20 from about US$5,50, while a kilogramme of beef costs US$5,90 and above from about US$3,80/kg.
A 500ml bottle of maheu still costs 55 US cents from 45 US cents, while a 2kg pack of rice still costs US$3,40 from US$2,20.
Cooking oil remains unchanged with a two-litre bottle going for betweenUS$3,50 and US$4 from US$3 and a 10kg bag of mealie-meal costs US$6,95 from about US$5,30.
A 10kg pocket of potatoes costs US$14 from US$8,99.
“We want to commend Government for demonstrating that it is sensitive to the plight of its citizens,” said one consumer, Diva Mudomu.
“Basic commodities should remain affordable to the majority of consumers because they cannot do without these.”
Another consumer said the high prices of basic commodities was unjustifiable as it is almost a week now after Government scrapped the VAT.
“Most retail shops are ripping us off; this is daylight robbery indeed because Government yabvisa tax yacho asi ivo varikungokwidza mitengo (Government has suspended the VAT but prices remain unchanged),” said Nellia Musindo.
Bulawayo consumers are also yet to benefit from the suspension as major outlets have not reverted to old prices.
“Bayasibulala laba bantu. Can you imagine uholo lwethu alukakhweli since 2010 kodwa bayabe belokhu bekhweza intengo. Bathi imali yakhona siyayithatha ngaphi? (These retailers are ripping us off, can you imagine it is a public fact that our salaries remain unchanged since 2010 but they continue to hike prices year-in-year-out. Where do they expect us to get the money from?),” said Ntokozo Sibanda.
Another consumer from Nketa 9 called on consumers to boycott business that refuses to revert to old prices.
“Now that the Government has suspended VAT on basics, businesses should revert to the old prices so that the commodities are affordable,” said Munashe Moyo
“Consumers on their part should boycott the businesses that refuse to revert to old prices.”
Finance and Economic Development Minister Patrick Chinamasa said the suspension was meant to pave way for further consultation.
Minister Chinamasa said following concerns raised by parliamentarians, consumers, the business community and other stakeholders, Government decided to suspend the tax and further consult.
In a ministerial statement in Parliament last week, Minister Chinamasa said he needed guidance from the House so they could come up with something to tax.
“Following the debate that took place here and stakeholder representations, wherein concerns have been raised regarding potential informalisation due to perceived price increase, I propose to shelve the implementation of Statutory Instrument 20 of 2017 which levies VAT on potatoes, rice, margarine, maheu and meat products,” Minister Chinamasa said.
“This will allow for further consultation with relevant stakeholders and those consultations. I will start them with this august House.
“I need the august House to give me guidance.
“I must tax something to raise money to pay for service delivery, allowances and wages.
“So, we need to have guidance so that we understand and agree on which items to tax.
“So, the consultations will start with this august House.”
After further consultations, economists opine Government will come up with either zero VAT on these basics or very little percentage which will ensure the basics remain affordable.