Finance and Economic Development Minister Mthuli Ncube says the 2 percent Intermediated Money Transfer Tax on transactions will continue for much longer as it covers for tax defaulters.
His comments come amid growing calls by business leaders to scrap the tax that they claim is increasing the cost of doing business. Among those disputing the introduction of the tax is Combined Harare Residents' Association (CHRA) director Mfundo Mlilo who made a court application last month challenging the SI 205-2018.
Industrial lobby groups among them the Confederation of the Zimbabwe Industries and the Zimbabwe National Chamber of Commerce, have also voiced their concern on the subject.
However, Minister Ncube has maintained that the tax sought to expand Government's capacity to bankroll capital projects and retooling of diverse economic sectors.
In an interview with Zimpapers Televison Network on Monday, Prof Ncube said the contested tax will be channelled towards improvement of the country's productive sectors to stimulate economic growth.
Part of the tax has also been used to cushion workers through the provision of the highly subsidised Zupco buses.
"We will not scrap the 2 percent tax because it helps us on the compliance front, in terms of lowering tax. I cannot pre-announce what I will say in the budget, all I can say generally is we want to support growth and productivity. One of the things we have to look at is obviously incentives and tax adjustments," said Minister Ncube.
Popularly known as 2 percent tax, the Intermediated Money Transfer Tax came into effect on October 13, 2018 after it was gazetted in Statutory Instrument 205 of 2018.
However, High Court Judge Justice Happias Zhou recently scrapped Statutory Instrument (SI) 205 of 2018, which enabled Government to levy 2 percent tax on electronic money transactions above $20. The tax was introduced as an austerity measure by Minister Ncube.
However, Justice Zhou's judgment had no material effect since there is now a Finance Act, which provides for the contested tax, passed on August 21.