Home > General > Zimra’s outrageous customs and exise taxes

Zimra’s outrageous customs and exise taxes

Tendai Biti in the Reconstructing Zimbabwe hel...

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Cross border trade has been the lifeline for many unemployed Zimbabweans who make a living buying and selling goods from various neighbouring countries. Late last year, the Zimbabwean government together with the Zimbabwe Revenue authority have introduces a ban on the use of the $300 rebate on most goods. The new tariffs are quite steep and leave no room for profit for the traders. Cross border traders, fed the nation when Zimbabwean shops were empty. They travel across borders, bringing in goods that are not available in Zimbabwe And play a vital role in the economy. One visit to Beitbridge will prove just how vital the cross border trade is to Zimbabwe. It is disheartening to see the government’s reaction to cross border trade.

Instead of enabling and facilitating trade, the government is stifling and discouraging trade and enterprise. Importers of blankets, footwear, refrigerators, stoves and other electrical gadgets now pay 40% of the purchasing price plus a flat rate of US$5 per unit as duty. Government is also now charging between 10% and 25% duty on basic commodities such as maize meal, cooking oil, potato chips, baked beans and mixed fruit jam. The consignment of goods is also charged according to the weight of the goods, each kilo being charged at $3. Cross border trade has been dealt a heavy blow.

Most traders will stop trading as it will no longer be profitable to continue to do so. High customs charges discourage any businesses seeking to do business with Zimbabwe. In this global economy, our economy must favour the movement of goods into and out of Zimbabwe. A revenue collection system that works, is efficient with tariffs that are reasonable encourages businesses to do trade with Zimbabwe. To benefit from the globalization of the world, customs and duty must be set at levels that protect local business while also encouraging products from other countries.

The world is now benefiting from economies of scale available in some nations such as China and Japan. Even the great Western powers make use of Chinese goods to cut costs down and keep their products and services competitive. Most retailers in the West do not actually make their own goods within their borders they have them made in Asia. Giants such as Wall Mart, Marks and Spencer, H&M, ASDA, TESCO and many others have a good portion of their products made in Asia, because it makes good business sense. If their governments impose heavy duty on imports, it will greatly affect these companies and their economy as a whole. Zimbabwe is not self sufficient and Zimbabwe is too small a country to be a self sufficient and too tiny an economy to try and be self sufficient. The world is now a global economy and it is now about maximizing the benefits from global cooperation and trade.

For a nation with very little manufacturing and with most industries dying a slow death, this move seems to be rather ill thought out. If Zimbabwe was manufacturing goods and selling them at competitive prices, we could argue that the government is trying to protect Zimbabwean business. We surely cannot restrict the importation of goods so that companies who are failing to compete with foreign goods get it easy. Foreign goods are in abundance for a reason, they are cheaper than Zimbabwean goods. It is shocking that it is cheaper to buy a product from the USA as opposed to a Zimbabwean product. We cannot protect our industries by charging unrealistic tariffs on goods. Duty is good, but it must be reasonable.

As we speak Edgars is full of South African made clothes. Edgars has decided that it makes more financial sense to buy clothes from Edgars South Africa as it doesn’t have the economies of sale. There is not much of a textile industry left in Zimbabwe and yet we impose taxes on clothes and textiles. Maybe these taxes are aimed at the Chinese who can afford to pay the duty. Maybe Zimbabweans are now condemned to wear fake Chinese made goods that don’t last. However, the Chinese are very prudent and if it turns out that they are not making enough profits, due to increases in taxes, they too could move out.

The current economic climate makes it tough for Zimbabwean manufacturers to compete. They must however, find innovative ways to improve the quality of their products while competing on price. Even if you go Mbare Musika, venders would rather sell one bunch of vegetables all day and throw the rest away at the end of the day, instead of reducing prices. Pricing policies are making Zimbabwean goods uncompetitive. Businesses would rather charge more and sell less and make a loss, as opposed to selling more at a lower price. The government seems to support this way of thinking, by protecting such businesses through increases in duty. The Zimbabwean populace suffers as a result.

South Africa, where most of these traders buy their goods has a very robust but effective revenue collection body and regulations, South African Revenue, SARS. I remember when I relocated to South Africa, I received a container with all our household goods and SARS asked me to pay R7000 as security which would be paid back after I had sorted out my work permit. After submitting my application to home Affairs, I took the receipt to SARS and was given a cheque for the total R7000, not even a cent was removed for administration or any other costs. Had I shipped my goods to Zimbabwe, I would have had a nightmare. The role of revenue collectors is not to discourage trade and the movement of goods.

There are products such a Mazoe that compete with foreign goods. In fact I think, no foreign drink competes with Mazoe. We haven’t seen any influx of South African drinks, because our local drinks taste good are priced right. Zimbabweans around the world buy Mazoe to take with them abroad. This is what other businesses must strive for, to create loyal customers instead of twisting arms.

The new regulations stipulate that shoes are now limited to one pair per traveler. It is no longer possible to buy the shoes you want outside the country and bring them in without paying duty on them, even if they have been worn. You cannot buy shoes for family or friends, only one pair is allowed. All this is so, yet Bata doesn’t make shoes that twenty year olds want to wear. I am not sure who shops in Bata, because even older people don’t go to Bata to buy shoes. They do not make high fashion shoes or boots, yet the government is trying to force everyone to buy from Bata. Shall we all wear matommy emutowenyemba, (brown coloured cotton tennis shoes)? If Bata and shoe manufacturers in Zimbabwe were making the shoes people wanted, at affordable prices there would be no issue. The same goes with blankets, people like two in one blankets, but there isn’t a company in Zimbabwe satisfying that need. There is no company in Zimbabwe that makes good underwear, yet buying underwear has been banned. If you are big busted, you will not find a bra that fits in a Zimbabwean shop, yet, you cannot buy bras even if it is within your allowance.

Finance minister Tendai Biti last year said men who buy second-hand underwear for their wives are failures. His comments were followed by the banning of importation of undergarments. This is an offside remark that badly calls for another. “If the government were on top of their game, that is, if they were not failing as politicians, men would have decent jobs and they would buy their wives brand new underwear from Lasenza or Victoria Secrets, and pay duty on it!”

Zimbabweans cannot be forced to buy local goods if the goods are not of the required standard. This is not an emotive thing, people cannot just buy something because it is made in Zimbabwe. People need to justify why they spending their money, there is a lot of competition for every dollar in the pocket. A consumer should buy something because they want to, not because there is no better alternative.

As for how this whole customs duty changes will work will remain to be seen. If a woman bought second hand underwear for herself while in a foreign country, how would the customs office know whether this was old or ‘new’ underwear? Maybe the officers’ now have to rummage through underwear to verify which is new? Is this not a violation of human rights. If a traveler bought shoes and wore them while on holiday, how will the officer know if they had them before leaving Zimbabwe. That is absurd. It might be necessary to list down all the items in a person’s luggage before they exit Zimbabwe. This is the way to ensure you don’t pay duty on your own belongings. I wonder what will happen when I travel to and from Zimbabwe now, maybe the officer will think my three year old shoes are new acquisitions because I only wore them once.

Zimra needs to find more innovative ways of collecting revenue. I really like the American way of thinking, each time the economy suffers, the US government stimulates the economy and encourages spending by reducing taxes and giving incentives. Zimbabwe tightens the tax fist in the midst of trying times. The more money people have to spend, the more revenue there is to collect. We should really be trying to give informal businesses and cross border traders a heads up, so that they pay reasonable duty and make enough money to pay faxes on their earnings. Trying to get revenue by increasing duty only leads to less revenue as less people will continue in the cross border trade. Government must be doing more to encourage new businesses, create an enabling environment for business and find ways to create more jobs. The more people are in formal employment, the more taxes they will collect. It is not fair to keep penalizing those who are trying to get on with life in a challenging environment by imposing higher duties. There are other ways of generating revenue which do not cripple industry. The result of all this is that prices are going to go up and people will suffer more.

Categories: General
  1. January 15, 2012 at 4:15 am

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  2. January 15, 2012 at 7:22 am

    I agree whole-heartedly – MAZOE is the best fruit-juice!

    • January 16, 2012 at 9:14 am

      Kudoes to Schweppes Zimbabwe, the South African Mazoe, is not as good.

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  14. Anonymous
    November 3, 2012 at 9:09 pm

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    February 21, 2013 at 10:53 pm

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  16. January 16, 2012 at 9:17 am

    I guess it is all talk. They say that African’s like to compete where they can collaborate. Collaboration is not in our blood. But we need to start rethinking our policies so that the region can benefit from each others strenghts and opportunities.

  1. January 15, 2012 at 8:23 pm
  2. January 24, 2012 at 11:26 am
  3. March 20, 2012 at 10:57 am
  4. March 24, 2012 at 1:47 pm
  5. May 14, 2014 at 9:58 am

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