Finance minister Tendai Biti has been forced to take steps to slash the shock 25 percent hike of surtax on imports of food and other basics.

Biti admitted at a news conference in Harare yesterday that he had come

under withering pressure from “various stakeholders” after publication of

the new import tariff regime in the January 14 edition of the Daily News.

The new tax regime came into force on January 1, 2012.

The 25 percent surtax was imposed across the entire range of goods from

basics to luxuries, with the new import regime affecting almost everything

from second-hand vehicles to food, even beer and cigarettes.

The new duty regime was announced in the 2012 national budget presented by

Biti to Parliament in November last year as a measure to support increased

domestic production and level the playing field with regards to some of the

imported commodities.

When the new tariff regime was gazetted last week by the Zimbabwe Revenue

Authority, they torched a storm, which has forced the minister into a

dramatic climb-down.

“Concerns have been raised by stakeholders over some of the tariff measures

government implemented from the 1st of January 2012,” Biti told reporters

yesterday.

“Here there are two things. First is the expanse of those tariffs, the

expanse of the goods that are affected by those tariffs, there have been

concerns about those.”

The 25 percent surtax covers literally everything from beauty products to

electrical household appliances such as refrigerators, ovens, cookers and

other reception apparatus for TVs.

The surtax more importantly affects a wide array of basic foodstuffs such as

fresh as well as frozen whole chickens, frozen cuts and offal, milk and

cream, yoghurt, fermented milk, buttermilk, cheese, bird’s eggs, potatoes,

tomatoes, onions and shallots, garlic, carrots and turnips, mixtures of

vegetables, peas, beans, sausages, uncooked pasta, jams, fruit jellies,

marmalades, soup and broth preparations, sweet biscuits, tomato ketchup and

other tomato sauces.

The new regime also affected alcoholic beverages such as malt beer, wine,

ciders, brandy, whiskey, vodka, spirits as well as Virginia flue-cured

tobacco and burley tobacco.

Biti said he had taken heed of concerns from economists and other

stakeholders that the hike will trigger a massive inflation surge and that

it could ignite shortages of basics given depressed local supply side

constraints.

“We have listened to the way they are affecting basic commodities and so

forth,” Biti said.

The tough-talking minister blasted the manner in which the new tariff

measures were being implemented by tax collector Zimra.

“We have women being asked to put on new shoes, bags being opened (at the

border) and so forth. We don’t accept that, it is not the law,” Biti said.

“Public servants, parastatals, have got a duty to respect the public; they

have got a duty to respect citizens of this country. We will not accept

that.”

The inhuman treatment of travellers by Zimra officials at several border

posts including Harare International Airport was exposed by the Daily News

through a series of articles.

Biti admitted there was overwhelming national condemnation of the 25 percent

hike in surtax of second-hand cars and basics.

“Given the huge representations that have been made to us as a ministry, we

have embarked on the process of stakeholder consultation so that we review

or adjust those statutory instruments, the appropriate measures to review,

and some of the measures therefore will be instituted in the next few weeks

or few days if we are lucky,” Biti said.

“But I want to appeal to the Zimbabwe Revenue Authority, I want to appeal to

all government bodies that provides services to the people whether it’s the

passport office, whether it’s the death certificate office, whether its VAT,

the government is there to serve the public, public servants are there to

serve and not to be islands of fascism where we harass people and so forth.

“So we don’t accept what certain officials at the Zimbabwe Revenue Authority

have been doing.”

Biti said he had received several complaints from trans-border traders and

other stakeholders of intrusive searches and other bizarre methods of

enforcing his new regulations at the border.

“That is not the policy of this ministry, that is not the policy of this

government,” he said. “The long and short of it is that we will review and

adjust following a process of consultation. We will make announcements

through the relevant statutory instrument.”

Biti has also introduced a controversial ban of imports of second-hand

underwear that has also attracted massive criticism.

New Taxes

HARARE - Food prices and other basic commodities are set to increase

following an announcement by the Zimbabwe Revenue Authority that a 25
percent surtax would be charged on the commodities starting January 1.

The development follows disclosures that government officials, including
ministers, were bringing commodities into the country without paying duty.

This includes luxury motor vehicles and even food.
The surtax, according to Zimra, will be charged on things such as food
stuffs, second-hand light passenger motor-vehicles which are more than five
years old from the date of original manufacture, and many other commodities.

Reads the notice in part: “...Surtax of 25 percent of the value for duty
purposes shall be charged and paid in respect of the importation into
Zimbabwe.
“Included in the goods to be taxed are double cab vehicles for the transport
of goods, foodstuffs such as fresh, chilled as well as frozen whole
chickens, frozen cuts and offals, milk and cream, yoghurt, fermented milk,
buttermilk, cheese, bird’s eggs, potatoes, tomatoes, onions and shallots,
garlic, carrots and turnips, mixtures of vegetables, other vegetables, peas
(excluding garden peas and marple peas), beans, sausages and similar
products, uncooked pasta, jams, fruit jellies, marmalades, soup and broth
preparations, sweet biscuits, tomato ketchup and other tomato sauces,” the
notice added.

Alcoholic beverages such as malt beer, wine, cider, brandy, whisky, vodka
and spirits will also attract surtax.
Smokers will not be spared either as virginia type flue-cured tobacco,
burley tobacco as well as all other tobacco types will be taxed.

Other products that will be attracting surtax range from beauty products to
electric household equipment such as refrigerators, ovens, cookers and other
reception apparatus for television sets.
Economic analyst John Robertson said the move by Zimra will trigger massive
price increases which will increase inflation.
Robertson said; “It will add to the cost of those things unless if we can
produce them ourselves.
A lot of these goods are not being made in the quantities needed by the
country and in most cases we can’t find them in our local shops because we
do not have the machinery to make them.

Power cuts are also negatively affecting our manufacturing industry and we
have experienced a loss of skilled people.”
He added: “We will see an increase in the price of buying these goods and it
is going to affect inflation first and in the next two years we might see a
positive result in that we might be able to produce our own products but
this will be in the long run.”

Air Zimbabwe

Zimbabwe’s national airline is in the headlines again this week after the only plane still operational was grounded, due to technical faults. This continues a very troubled season for the management who are facing strong criticism for the financial failings at Air Zim.


Flights from Harare to Bulawayo and Victoria Falls were reportedly cancelled on Monday when the Boeing 737 aircraft developed a “glitch” in one of the engines, leaving passengers stranded.

Air Zim’s acting chief executive officer, Innocent Mavhunga, and board chairperson Jonathan Kadzura, have so far made no comment regarding the airline’s future. It is believed debts of at least $140 million are outstanding.

According to Newsday newspaper, the broken down plane could not be fixed because workers are currently on strike over unpaid salaries. A source reportedly said that most workers had not been paid for nearly six months.

Political and economic analyst Bekithemba Mhlanga told SW Radio Africa that blame for the airline’s demise “should be placed squarely on Robert Mugabe and the board of directors”. He referred to Mugabe’s constant use of the airline for personal trips and mismanagement by the board as the major reasons.
“We’ve reached a point where there should be either civil action or criminal liability against the management for their part in terms of how we got to this position,” Mhlanga explained. He added that the board never had a plan of action and should have forced privatization of the airline years ago.

A crisis developed a week before the holidays last month when creditors seized a plane at Gatwick Airport in London because Air Zim had failed to pay $1.5 million owed to an American spare parts company. Hundreds were stranded for over a week at the airport.

Earlier in the week Transport Minister Nicholas Goche ordered all its regional and international flights to be suspended, fearing seizure of the remaining aircraft by creditors.

De Beers Retail Arm Says Will Avoid Zimbabwe's Marange Diamonds

The Marange fields have been mired in controversy since the military took over operations from African Consolidated Resources in 2006 with rights defenders saying the army perpetrated abuses on ordinary people, killing some in the process

Forevermark, the high-quality diamond retail arm of diamond giant De Beers, says it will not sell any diamonds from the controversial Marange fields in eastern Zimbabwe citing inferior quality.

De Beers and Harare are currently embroiled in a war of words over the diamond giant's activities in Marange between 2000 and 2005. Harare alleges that De Beers siphoned rough stones worth millions of dollars while telling government it was just prospecting.

But De Beers denies the charges saying its operations in Marange were above board and they left after realizing the diamonds were not up to their standards.

Speaking at the launch of the exclusive brand in Johannesburg, South Africa at the weekend chief executive Stephen Lussier said Marange diamonds were generally too small and low in quality for the brand to sell.

He added that Forevermark’s selection process goes well beyond adherence to the minimal standards of the Kimberley Process, which recently gave Harare permission to sell Marange diamonds on the international markets after a three year stalemate in the diamond watchdog group.
Lussier said today’s consumers are now more interested in the source of their luxury purchases.

“The Forevermark carries a guarantee that the diamonds used for our products have contributed positively to communities, the environment and supply chains along the way," said Lussier.

“In a diversifying and maturing industry, consumers seek more from their luxury purchases. Not only do they demand value for money, but there is increasing interest in the source of their purchase and the journey it has traveled."

He added that less than one percent of the world’s diamonds are eligible to be branded Forevermark.

The Marange fields have been mired in controversy since the military took over operations from African Consolidated Resources in 2006 with rights defenders saying the army perpetrated abuses on ordinary people, killing some in the process.

Studio 7 was unable to reach De Beers to check if the diamond giant’s other operations would handle Marange diamonds.

Mines Minister Obert Mpofu said Harare is not surprised by Forevermark’s statement.

He repeated his accusations that De Beers had already unlawfully benefited from Marange diamonds during the 10 years the company held prospective rights for the fields.

Diamond activist Farai Maguwu of the Centre for Research and Development in Mutare said for as long as there’s no consensus amongst the governing parties in Harare over Marange, the world would find it difficult to accept Marange diamonds.

Research Director Allan Martin of Partnership Africa Canada commented that Forevermark has done the right thing, adding more international companies could follow suit.

Zimbabwe to have no electricity for another 4 years

Published: November 15, 2011

(Harare)Zimbabwe which has struggled with electricity supply in recent years, is to yet brace up for a gruelling additional 4 years without adequate supply of electricity resulting in little or no electricity for many areas as load sheddings’ frequency is increased, Zesa’s chief executive officer Engineer Josh Chifamba revealed yesterday.
The reasons for the shortages are still to be made fully known with ZESA at present blaming what it termed ‘an array of challenges among them vandalism that destroys property worth US$810 000 per month’.
Last year in June, ZimEye revealed that power outages would continue into 2014 as ZESA was struggling to raise a whooping US$125 million needed to repair the outdated Hwange Power Station generators, with US$8 billion needed for the country to restore optimum power production levels.

Zimbabwe Electricity Transmission and Distribution Company’s systems development manager Ikhupuleng Dube told a business forum in Harare on Thursday that ZESA needs US$125 million to repair Hwange thermal power station adding that Zimbabweans should brace for more power outages till 2014 because of the problem.

ZESA power lines

Zesa chief executive officer Engineer Josh Chifamba said the challenges that include a huge debt overhang, low installed capacity and general dip in the availability of power in the region will see the power utility load-shedding to share the limited resources.
Eng Chifamba was giving oral evidence before a Parliamentary Portfolio Committee on Mines and Energy
The committee, which was chaired by Uzumba MP Cde Simba Mudarikwa (Zanu-PF), wanted to know the challenges faced by Zesa. Eng Chifamba said the recent tariff increase, coupled with new projects currently being implemented both at Hwange and Kariba Power Station should be a source of hope for improved electricity supply in the next three years.
“When are we going to see improvement? Obviously what Honourable Members and the rest of the country are expecting to hear is the time when we will not be load shedding.
“That time is not very close, the time we need to commission new projects is about three years.”
He said two more projects are being implemented at Hwange and Kariba.

“At Hwange, we will be putting two extra machines to give us 600 Megawatts and Kariba 300 MW, that’s 900 MW, we expect to finish Kariba in 2015 and Hwange 2016,” he said.

Eng Chifamba said the completion of these projects would not see loading shedding easing.

“When that happens, it will alleviate our situation but we will still not be out of the woods.”

He said Botswana was currently working on a new project and Zesa hopes to tap into it when it is completed.

The deal was, however, subject to the two countries agreeing terms.

Eng Chifamba said consumer debt had been reduced from US$450 million to US$427 million owing to payment arrangement Zesa has entered with customers.

The delay in approving a cost reflective structure has seen Zesa failing to repair and maintain equipment while affecting operations.
The Zesa boss implored legislators to come up with a legal instrument that would punish consumers who continue to use old bulbs instead of energy savers once new bulbs have been introduced.

On tariffs, Eng Chifamba said the approved structures though coming late had gone a long way in stabilising operations.
“The tariffs are meant to address these challenges. It will simply allow us to operate our business normally,” he said.
It was critical, said Eng Chifamba, for stakeholders to realise that electricity was not cheap.

He said the price of coal has also threatened the viability of their business.

Eng Chifamba called for a good operating environment conducive to draw investors.

“We need all forms of stability in the country,” he said.

On independent power producers, Eng Chifamba dismissed indications that they were blocking them.

He said Zesa wished to see more stakeholders coming in to assist them deliver electricity

PARLIAMENTARIANS want to be exempted from paying Zesa utility bills

PARLIAMENTARIANS want to be exempted from paying Zesa utility bills saying they cannot afford the tariffs amid serious fears of disconnections.


Zesa has however, stood firm saying the request was untenable as it would result in consumers subsiding the legislators.

Mberengwa East MP, Cde Makhosini Hlongwane (Zanu-PF), said the power utility should consider either a full or a partial exemption for legislators in light of their poor remuneration.

He said this during a pre-budget seminar for parliamentarians in Victoria Falls.

"Can MPs have an exemption, even a partial exemption from paying electricity? If that is not done, most of them might suffer the embarrassment of having their power disconnected," he said, drawing applause from fellow legislators.

Zesa Holdings chief executive officer Engineer Josh Chifamba who was a participant on a topic "Measures to Address National Energy," shot down the proposal.

"We do not have that dispensation.

"Tariffs should be cost reflective. When we make that exemption, there have to be transparent otherwise the poor people in high density suburbs might end subsiding the rich in Borrowdale," he said.

Eng Chifamba said legislators might probably consider approaching Finance Minister Tendai Biti with their plight and discuss how Treasury could assist them.

Uzumba MP, Cde Simba Mudarikwa (Zanu-PF), proposed that Zesa debit the money owed by the Grain Marketing Board to cover for unpaid farmers' bills since both of them were State entities.

Eng Chifamba dismissed the proposal since Zesa has its own balance sheet.

Energy and Power Development Deputy Minister Hubert Nyanhongo said there was nothing Zesa could do to assist those consumers who had made advance payments for their electricity during the Zimbabwe dollar era but were not credited when the country switched to the multi-currency system.

Gokwe MP, Cde Dorothy Mangami (Zanu-PF), had complained that several people especially farmers had made advance payments covering almost a year but were not credited in the United States dollar terms.

"I want to say tough luck. We don't have replacement in terms of those who had deposited their Zim dollar in advance.

"When we dollarised we lost out everything in Zim dollar, so tough luck for those people," Deputy Minister Nyanhongo said.

On load shedding, Eng Chifamba said there was nothing the power utility could do to avert it until there is sufficient power generation.

He said one way of dealing with load-shedding and billing challenges was the impending pre-paid system.
The Zesa boss was however, quick to say they would be levying 10 percent of money paid for those owing Zesa prior to the commencement of the pre-paid system

Zimbabwe's Mugabe Threatens Swiss Holdings in 'Reciprocity' for Visa Denials

Swiss companies in Zimbabwe include food giant Nestlé, which temporarily shut down a Harare processing plant in December 2009 due to pressure brought when it stopped buying milk from a Mugabe-owned dairy
Ntungamili Nkomo
Washington
News Updated: 8:06 UTC Monday 31 October 2011 RSS Feed 31 October 2011

Zimbabwe's Mugabe Threatens Swiss Holdings in 'Reciprocity' for Visa Denials

Although Mr. Mugabe had received a visa, he canceled the trip and headed to Singapore for treatment of what credible reports say is metastatic prostate cancer.

Arriving home at Harare International Airport late Sunday, Mr. Mugabe told journalists he was saddened by the Swiss visa denials, adding, “now they are showing that they are vicious and we will reciprocate because they have properties here. We are not without means to reciprocate.”

Mugabe, 87, brushed aside lingering concerns about his health saying he is fit.

Swiss companies operating in Zimbabwe include food giant Nestlé, which temporarily shut down a Harare milk processing plant in December 2009 amid threats from ZANU-PF after it stopped buying milk from Grace Mugabe’s Gushongo Dairy Farm.

The Swiss embassy in Harare refused to comment.

Switzerland imposed sanctions on Mr. Mugabe and hundreds of ZANU-PF officials in 2002, accusing them of human rights abuses and ballot-rigging.

Economic analyst Walter Nsununguli Mbongolwane commented that Mr. Mugabe’s threats could handicap economic growth by scaring away investors. "When they decide to seize Swiss companies, they will hide behind indigenization,"he said, referring to the ZANU-PF-inspired drive to claim a controlling black stake in foreign enterprises.

Political analyst Bhekilizwe Ndlovu told VOA Studio 7 reporter Ntungamili Nkomo that Mugabe’s threats do not bode well for economic recovery.