Harare — THE Confederation of Zimbabwe Industries has urged the Reserve Bank of Zimbabwe to knock off 12 zeros from the Zimbabwean dollar while freezing the monetary base (money printing) at current levels as a strategy to stabilise the local unit.

The industrial representative body proposed that authorities allow multiple currencies to be used, stressing the local unit should remain a legal and not compulsory tender.

"Freezing the local currency monetary base will quickly stabilise the local currency. After a period of free trade and subsequent stabilisation, a fixed rate can be declared," read a document on its recommendations to the Government.

CZI said the removal of zeros was vital for processing transactions.

In August, the central bank removed 10 zeros, but hyperinflation and speculative activities rendered the strategy less effective.

Presently, figures running to quintillions (18 zeros) are being transacted. The removal of 12 zeros would see a return to millions becoming the highest range of figures once again.

Some analysts, however, were of the opinion that slashing zeros would have to be part of a more holistic package to salvage the local unit, hence the economy.

CZI said it was important that currencies such as the United States dollar and the South African rand continued to be regarded as tender although it proposed that the US dollar be made the primary unit of account for all transactions in the economy.

Tax bands, said the document, would be set in US dollars with the threshold at the Poverty Datum Line and a maximum rate of 20 percent for anyone earning more than US$1 000 as a strategy to enable businesses to be more competitive while retaining skills.

Corporate tax, currently at 35 percent, would need to be reduced to 20 percent, with the US dollar remaining the basis of accounting, it was proposed.

Tomorrow, Acting Finance Minister Mr Patrick Chinamasa is expected to present the 2009 National Budget statement, while the monetary policy statement would be announced anytime soon.

The industrial representative body challenged the Government to ensure tariff charges by such parastatals as Zesa Holdings, Zinwa, TelOne and local authorities be set at levels that were regionally competitive.

Currently, consumers feel shortchanged by some parastatals that have pegged their US dollar charges at levels much higher than those obtaining in the region.

CZI president Mr Kumbirai Katsande said business was presently in negotiations with Zesa and other parastatals to come up with "workable" tariffs.

The body also proposed the introduction of fuel tax payable in foreign currency to boost Government coffers.

Furthermore, all customs duties would have to be levied in foreign currency while rates, particularly on luxuries produced locally, would need to be reviewed downwards.

All other taxes, it was suggested, could be paid in either US dollars or Zim dollars to maintain demand for local currency.

"Reviewing rates on luxuries downward will boost revenue and help employee retention. The inability to afford luxuries is a key reason for skills flight," CZI said.

Key objectives to the proposals were the restoration of fiscal balance, boosting capacity utilisation and employment creation and to reduce inflation levels.

Furthermore, strategies were recommended to support exports and increase foreign currency inflows while setting "realistic" exchange rates would increase inflows into the formal system.