BULAWAYO – Finance minister Mthuli Ncube has defended the 2 percent tax on electronic transactions (IMTT), describing it as one of the key revenue streams keeping the government afloat.
Ncube is under growing pressure to scrap the unpopular levy – including from within the ruling Zanu PF party, which resolved at its recent annual conference that the charge should be abolished.
Addressing MPs during a pre-budget seminar in Bulawayo on Wednesday, Ncube warned that removing the tax would blow a hole in the national purse that could only be filled by introducing new taxes or raising existing ones.
At the end of 2024, the IMTT accounted for about 8 percent of total tax collections, down from 16 percent when it was introduced in October 2018 – a decline critics say shows it has pushed more transactions into the informal economy.
“This is one of the taxes that have kept us going as a country and as a government. We have needed these resources to run government programmes — be it infrastructure, payment for vaccines, Covid, and all that. That’s where these resources are coming from,” Ncube said.
He added: “We can reduce IMTT by half a percent, but provided you allow us to increase VAT by half a percent, because we need those revenues. Would you agree with that? Or some other tax maybe?”
The IMTT has been widely criticised for burdening citizens and businesses already struggling under multiple taxes. Critics say it fuels inflation and discourages the use of formal financial systems. – ZimLive