Tobacco sales have increased following the scrapping of the 2% tax from all tobacco related transactions. Finance and Economic Development Minister Professor Mthuli Ncube intevened following tobacco stakeholders’ call for exemption from the two percent tax.
The tax effected a farmers’ and Government confrontation. Farmers withheld their crop due to low process and regulatory issues.
Ncube announced the Government Statutory Instrument 80 of 2019, which amended the Finance Regulations, 2019. The SI scrapped the tax from all transactions for the purchase of auction tobacco. He said:
It is hereby notified that the Minister of Finance, has in terms of Section 3 of the Finance Act made the following regulations; the thirtieth schedule (Intermediated Money Transfer Tax) in the Income Tax (Chapter 23.06) is amended in paragraph 1.
The transfer of funds for the purchase of auction or contract tobacco from buyers or contractors to auction floors and the transfer of funds by contractors and auction floors to growers of tobacco for deliveries of tobacco.
Some farmers who spoke to The Herald yesterday revealed that scrapping of the tax stimulated an increase in volumes of sales. Rusape farmer, Mr Tongai Muchemenyi said that seemingly, all systems are now in place although prices are still low.
Despite the removal of the tax, sales at the auction this year remain below sales in previous years. Farmers have so far sold 538 147 kilogrammes of tobacco worth US$896 166 compared to 6,8 million kilogrammes worth US$19 million.
