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Informal sector not affected by 2% tax

by Staff reporter
15 Dec 2020 at 06:17hrs | Views
AN OPPOSITION legislator has called on Finance minister Mthuli Ncube to stop collecting the 2% electronic transaction tax, saying it was burdening workers only as the informal sector was now transacting in the United States dollar which was not affected by the tariff.

The plea was made by Dzivarasekwa MP Edwin Mushoriwa (MDC Alliance) last week in the National Assembly while contributing to debate on the Finance Bill in relation to the 2021 National Budget.

Mushoriwa said the 2% transaction tax should be stopped as it was "overtaxing the overburdened civil servants", adding that it was punitive.

"The issue of 2% tax should have been dealt with by the minister in the 2021 National Budget. What was happening on the ground when the tax was introduced was that it was meant for the informal business. But right now, 90% of the informal traders at Siyaso or everywhere no longer accept payment in RTGS and EcoCash.

"If you go there with EcoCash they will tell you to go and change your EcoCash into US dollars. They now want to be paid in US dollars. What does that tell you? It means the informal market is no longer paying the 2% tax. Who is paying the 2% tax? The 2% is being paid by those who are formally employed, those who are formally registered. What it means is that we are actually overtaxing the already overtaxed formally employed persons and businesses," he said.

Mushoriwa said if Ncube insisted on the 2% transaction tax, then he would need to reduce the pay as you earn (PAYE) which was charged on employees' salaries, or make the 2% tax deductible for corporates and industries.

The opposition MP also urged Ncube to come up with a strategy to rationalise the civil service so that those that remained could be well remunerated.

"Let us have an efficient civil service which is lean and is well paid,'' Mushoriwa said.

Source - newsday