Natalie Nyathi,
Business Reporter
The Confederation of Zimbabwe Retailers(CZR) has slammed the recent increase by the Zimbabwe Revenue Authority(ZIMRA) of Value Added Tax from the previous 14.5 to 15% with effect from 1 January 2023.
The CZR which is an umbrella body for the Retail Sector and Shop owners, believes incorporating the Small to Medium Sector and the Informal Sector is the best way of increasing revenue to the fiscus.
“Expanding the tax base by incorporating the informal sector will increase revenue to the fiscus without requiring to increase VAT as prices respond negatively”, said Denford Mutashu the CZR founder and President.
Bulawayo based economic analyst and Cold Storage Company(CSC) Consultant Reginald Shoko, believes the increase of VAT by 0.5% will increase the rate of inflation which had been tamed by treasury for several months now.
” The decision to return the VAT percentage to its January 2020 rate will encourage inflation and erode buying power amongst consumers. This technically would result in reduction of expenditure therefore, affecting sales. In the short to medium term expect a wave of price increases”, he said.
Other economists say the increase in Value Added Tax by 0.5% will influence the increase of prices for some commodities where VAT is levied, however, they say its going to be marginal. Immediately after the public notice from ZIMRA came out, giant telecommunications company Econet Wireless quickly responded by hiking its tariffs and bundle prices.
“Please take note that our tariffs & bundle prices have been adjusted in line with VAT changes gazetted in the Finance Act (No.2), 2022 effective 1 Jan 2023”, read the statement from Econet.
Econet’s rival Telecel also released a similar statement.
“Please be advised that our Voice, Data, SMS and Bundle prices will be adjusted in line with VAT changes gazetted in the Finance Act (No.2), 2022 effective 1 Jan 2023. Changes to be effected on the 11th of January 2023”, read the statement.
The impact which the increase of VAT has on goods and services is that prices for stationery, groceries, tariffs and data bundles and everything else will increase including uniforms which were bought just last week at $18 probably anytime from now will skyrocket, though today prices for most goods were still the same as many shop operators were yet to update the prices.
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