THE Parliamentary Committee on Budget has criticized Finance Minister Mthuli Ncube for enacting a tax payment for fuel in transit arguing the measure's disadvantages outweigh the benefits.
In his Mid Term Budget Review, the Treasury chief imposed tax payments on fuel imported under Removal in Transit (RIT), saying the funds would be reimbursed at the Port of Exit in a desperate bid to deal with transit fraud where goods that are declared as transit consignment are offloaded in Zimbabwe.
But presenting an analysis of the Statement of the 2024 Mid-Term Budget Review, the Committee said the 'laborious' policy has very few benefits.
"The committee is of the view that the payment of duty and reimbursement at exit point will not adequately address transit fraud since transporters can offload fuel and reload with a different liquid. If ZIMRA is constrained to detect such malpractices, payment of duty and reimbursement will not address the existing challenge.
"Rather, it will persist. Apart from that, the policy greatly undermines the ease of doing business for genuine transit consignments that will be required to secure additional operational funds to meet duty obligations," he said.
The Committee said the administrative burden, on the part of ZIMRA, of receiving and paying revenue which is not available for public spending is unnecessary.
"Further, financial transactions of ZIMRA are not always free of charge. The policy is, therefore, against the Presidential mantra that "Zimbabwe is Open for Business". The policy's impact on doing business through Zimbabwe will be significant, potentially leading to retaliatory actions from other states.
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"Economic agents would likely choose alternative routes in other countries due to the excessive costs and burden associated with doing business in Zimbabwe," said the Committee.
The Committee said the proposed policy violates the existing regional trade agreements, particularly Articles 3 and 4 of the SADC Protocol on Trade, which provides for the elimination of tariff and non-tariff barriers to trade, and the elimination of import duties.
Added the Committee, "It is the Committee's view that ZIMRA should strengthen its administrative efforts to curb transit fraud rather than to attempt to plug its administrative slack using an extremely bad policy. Alternatively, a commitment from the clearing agent to pay duty in cases where goods do not reach the exit point or reach the exit port can assist in mitigating the transit fraud."
