Business / Companies
Biti threatens to scrap duty
23 Aug 2011 at 23:38hrs | Views
Zimbabwe's Finance Minister Tendai Biti has threatened to scrap duty on selected basic commodities following a spate of price increases that were now fuelling inflation amid fears this could negatively affect macro-economic stability, 'The Herald' reported on Wednesday.
Minister Biti restored import duty on selected basic commodities when he presented the Mid-Term Fiscal Policy Review Statement last month, but since then there have been unilateral price increases by retailers.
He reintroduced duty to help local manufacturers who could not compete with imported products.
Addressing a Press conference in Harare yesterday, Minister Biti said unjustified price increases were rendering recent increases in civil servants' salaries useless.
He said as a result, inflation, which was contained below 3 percent in the second quarter of 2011, was gaining momentum peaking at 3,3 percent in July against 2,9 percent in May and June.
"We will not hesitate to remove the tariffs that took effect after the Mid-Term Fiscal Policy Review of July 26. We have treated them with respect, so they should also treat Zimbabweans with respect.
"If some of you score own goals we will not hesitate to red card you without any questions," he said.
Minister Biti said if businesses continued to create artificial shortages, the Government would be forced to adopt corrective measures in the form of scrapping duty to allow the importation of selected low-cost basic goods.
"I am therefore urging local producers to reciprocate Government support by refraining from unethical, speculative and rent seeking activities, but rather take ad-vantage of such dispensations to improve productivity.
"Government will not hesitate to take appropriate action in protection of general consumers where such positive dispensations to local producers are abused."
The Finance Minister said since the reinstatement of duty on selected items, prices of products in the food basket increased with the cost of maize-meal rising by US22c, sugar US5c, salt US3c, onions US20c and beef US10c.
"These are worrisome developments, which if not addressed will reverse the gains made in overall macro-economic stabilisation," he said.
Inflation, the minister said, had the biggest impact on macro-economic stability as it determined the cost of labour, which was also a critical factor in terms of attracting foreign direct investment.
Despite the renewed pressure on inflation, the minister remained positive that the year end annual inflation target of less than 4,5 percent was still attainable.
He expressed reservations on Government expenditure, saying since the July salary increase for State workers, the country faced a US$700 million budget deficit after a US$260 million rise in staff costs.
He said Treasury would be forced to make sacrifices on certain programmes to provide cover for critical obligations such as health and education, construction of roads and water sources.
Minister Biti restored import duty on selected basic commodities when he presented the Mid-Term Fiscal Policy Review Statement last month, but since then there have been unilateral price increases by retailers.
He reintroduced duty to help local manufacturers who could not compete with imported products.
Addressing a Press conference in Harare yesterday, Minister Biti said unjustified price increases were rendering recent increases in civil servants' salaries useless.
He said as a result, inflation, which was contained below 3 percent in the second quarter of 2011, was gaining momentum peaking at 3,3 percent in July against 2,9 percent in May and June.
"We will not hesitate to remove the tariffs that took effect after the Mid-Term Fiscal Policy Review of July 26. We have treated them with respect, so they should also treat Zimbabweans with respect.
"If some of you score own goals we will not hesitate to red card you without any questions," he said.
Minister Biti said if businesses continued to create artificial shortages, the Government would be forced to adopt corrective measures in the form of scrapping duty to allow the importation of selected low-cost basic goods.
"Government will not hesitate to take appropriate action in protection of general consumers where such positive dispensations to local producers are abused."
The Finance Minister said since the reinstatement of duty on selected items, prices of products in the food basket increased with the cost of maize-meal rising by US22c, sugar US5c, salt US3c, onions US20c and beef US10c.
"These are worrisome developments, which if not addressed will reverse the gains made in overall macro-economic stabilisation," he said.
Inflation, the minister said, had the biggest impact on macro-economic stability as it determined the cost of labour, which was also a critical factor in terms of attracting foreign direct investment.
Despite the renewed pressure on inflation, the minister remained positive that the year end annual inflation target of less than 4,5 percent was still attainable.
He expressed reservations on Government expenditure, saying since the July salary increase for State workers, the country faced a US$700 million budget deficit after a US$260 million rise in staff costs.
He said Treasury would be forced to make sacrifices on certain programmes to provide cover for critical obligations such as health and education, construction of roads and water sources.
Source - TH
