Transaction tax-not yet effected

LAST week we discussed the legitimacy of the proposed changes to the intermediate 2% tax to be levied on money transfers. It must be noted that I said proposed changes because it is still just a proposal. The tax has not yet been effected. It can only be effected after it has been gazetted into a legal instrument. Therefore, the panic that has gripped the nation because of the minister’s statement is unjustified.

guest column: MIRIAM T MAJOME

The minister must take full responsibility for the ongoing confusion and chaos in the country. He was extremely reckless to announce that the tax would be applied immediately from October 1, despite it being impossible because the legal framework was not in place. While the tax itself may not be illegal, it is its implementation before it is properly instituted that is illegal. The minister has a duty to set the record straight and apologise to the nation for the chaos. He should state unequivocally that the tax has not yet been effected. The majority of people in the country believe they are already paying the tax hence the panic and price hikes. Businesses, schools and individuals everywhere are scrambling around in terror and panic like headless chickens doing what Zimbabweans do best, that is, instantly hike prices in a crisis and ask questions later. The government needs to handle the communications of such important and sensitive issues that affect the nation with seriousness and high level public relations skills they deserve and refrain from making careless statements that can be easily misunderstood and cause unnecessary and costly repercussions.
For lack of space, I would have attempted to do what the government failed to do and explain why the tax is actually a good idea.

We will discuss the procedure the minister has to follow before the tax proposal can become law and so far it has not been gazetted nor the process begun in earnest – at least to the public knowledge. Section 71 (c) of the Constitution compels the minister to give adequate notice to all affected parties before the tax can become law and implementable. He should give reasonable notice of the intention to effect the tax because the tax is property.

The notice should be given to everyone because everyone has an interest and rights to their money, 2% of which will be compulsorily acquired by the government. Every business and every person transacting money in Zimbabwe, including non-Zimbabweans, will be affected by the tax. It has far reaching effects and consequences on trade and individual transactions, so it should not be rushed in the way it appears. The notice must be published in the Government Gazette.

It is an incontrovertible fact that government has the total freedom to impose taxes on the citizenry as long as it is done in terms of the law. The transaction tax is not illegal per se, but its implementation without an enabling legal instrument is. Section 298 of the Constitution strictly forbids the introduction of new taxes without parliamentary approval. There has been no indication yet of when the process to legitimise the policy will commence. The Fifth Schedule of the Constitution which prescribes the procedures pertaining to Bills and other matters in Parliament provides further guidelines for the interpretation and institution of proposed laws. The schedule makes the distinction between ordinary Bills and the money Bill. The proposed tax will be introduced as a money Bill if it is to go through the normal parliamentary motion process. The process by which a Bill becomes an Act is extremely onerous and time consuming unless Parliament unanimously agrees to fast track it. Alternatively, the President may rely on the Presidential Powers (Temporary Measures) Act once again as was done to fast track the legitimacy and implementation of the bond note in 2016 to give effect to SI2016-133 of 2016 Bond Notes Regulations after questions were raised about the propriety of implementing a law without following the lawful process for its enactment If this tax proposal were to follow the ordinary route, it would take a long time for it to become law.

It will be introduced as a money Bill and has to go through the lengthy rigours of debate and countrywide public consultations as prescribed in Section 141. It is for this reason that it is very unlikely to proceed through the ordinary route because it will obviously be rejected like no other legislation proposal was ever rejected. A money bill means a bill that makes provision for—

 Imposing, increasing or reducing a tax for the benefit of the State;
 Appropriating money from, or imposing, increasing or reducing any charge on, the Consolidated Revenue Fund or any other fund vested in or controlled by the government;
 Compounding or remitting a debt due to the State;
 Condoning a failure to collect a tax due to the State; or
 Condoning unauthorised expenditure by the government.

The prescribed process of turning a Bill into an Act of Parliament is so onerous that if government is serious about implementing the proposed intermediate tax, this route is best avoided. Parliament does not deal with money bills or fiscal motions or petitions or amendments except on recommendations from the Vice-President, minister or deputy minister, otherwise the President of the Senate or the Speaker will not allow any such motions to be debated.

Now, given that the minister or his deputy or any of the two Vice-Presidents haven’t moved a motion, it cannot be implemented. The minister must be prepared for the arduous slog or must find a creative and faster way of fast tracking it. Fast tracking it is the only way and time is running out for the government. The minister needs to move quickly to douse the fires of uncertainty and panic.

The nation simply needs clarity and to know what is going on. He cannot just make such an impactful statement and fly off to Paris the next day, leaving the nation burning because of uncertainty. Finance ministers should present draft legislation immediately after making any form of fiscal statement. Minister Mthuli Ncube, in this case, appears to be inexplicably dragging his feet. It is essential to follow due procedure in order to be legally compliant. It is even more important for the government to set a good example than to be the champion law breaker. We reiterate again that no matter how desperate and out of time the government is, it is still compelled to follow due process. It cannot break its own laws.

The 2% intermediate tax has not yet been effected and it cannot be unless there is a legal instrument in place, therefore,the price hikes implemented under the guise of provisioning for the tax are just daylight robbery. It is just profiteering and this is manifestly illegal and should be challenged.

The Consumer Council is deafeningly silent as consumers are being fleeced and fleecing each other left, right and centre. However, above all, the government should take control and get the nation to calm down and take it easy because the 2% intermediate tax is not yet in force.

 Miriam Tose Majome is a lawyer and teacher. She writes in her personal capacity and can be contacted on enquiries@legalpractitioners.org