HARARE – Finance minister Mthuli Ncube on Thursday unveiled a Z$421 billion (US$5.14 billion) budget for 2021, with a new drive to collect a raft of taxes in hard currency.

The MDC Alliance said his moves to tax small businesses in hard currency made it a “vicious anti-working class budget.”

Zimbabwe abandoned the use of multiple currencies last year following the re-introduction of the Zimbabwe dollar, but the local currency was shunned by the transacting public as its value tanked.

Despite swatting opposition demands to scrap the new currency, Ncube has been forced to allow foreign currencies, mainly the South Africa rand and the U.S. dollar, to be used alongside the Zimbabwe dollar.

The roads agency ZINARA is now empowered to collect toll fees in foreign currency and landlords of small and medium enterprises are now required to collect US$30 presumptive tax from each business every month.

Some fuel companies were also noy paying necessary excise duties in foreign currency, the minister charged.

“Current statistics show that 70 percent of fuel is sourced under the Direct Fuel Importation (DFI) facility, while the remaining 30 percent is funded through the auction system. The currency of excise duty revenue should, thus, reflect current trends,” he said.

“In order to ensure proper accounting of excise duty revenue in foreign currency, fuel imports shall be deemed to be in foreign currency under the DFI unless the importer provides satisfactory documentary evidence to the effect that funds were sourced through the auction system.”

Businesses that collect foreign currency for transactions but pay their tax obligations in the local currency will face penalties, the minister said.

“Market intelligence surveys show that some VAT registered operators are not adhering to statutory requirements. Thus, sales in foreign currency are not accurately accounted for, thereby undermining fiscal revenues,” Ncube told Parliament.

“In order to safeguard fiscal revenues, I propose the following measures: VAT registered operators’ systems should be interfaced with the ZIMRA server with effect from December 1, 2020, failure of which no operator will be issued with a Tax Clearance Certificate.

“In addition, non-compliant operators will be excluded from participating in the weekly foreign currency auctions.”

Ncube called on the transacting public “to demand receipts showing the correct currency of trade, in order to reduce fraudulent activities by operators.”

The Zimbabwe dollar has stabilised on the official foreign currency auction, trading at 1:81 to the U.S. dollar for several weeks, but on the black market US$1 is now worth between Z$90 and Z$100. That has led some businesses to offer discounts on dollar payments.

MDC Alliance vice president and former minister Tendai Biti said Ncube’s measures would hamper the growth of small businesses.

“The raft of tax measures proposed are anti-poor and anti-people, particularly presumptive taxes,” Biti said.

“The tax attack in the informal economy, the levying of taxes in U.S. dollars, the punitive taxes on fuel makes the 2021 budget a vicious anti-working class budget.”