Opinion / National
Mthuli Ncube's budget puts ZANU PF's strongholds at risk as VAT requirement threatens rural-owned businesses
07 Dec 2023 at 08:49hrs | Views
In a move that is set to have significant repercussions in Zimbabwe's
political landscape, Finance Minister Mthuli Ncube's new budget has
introduced a requirement that manufacturers only supply goods to
entities registered for Value Added Tax (VAT). This decision, while
motivated by the government's need to increase revenue and combat tax
evasion, is expected to disproportionately affect rural-owned
businesses, many of which are supporters of the ruling party, ZANU PF.
The requirement for VAT registration, though seemingly innocuous, presents a formidable obstacle for numerous rural enterprises, such as tuckshops and small-scale businesses, located in areas such as Harare South, Epworth, and other regions known for their allegiance to the ruling party. The vast majority of these businesses are not currently registered for VAT and face uncertain prospects of being able to comply with the new regulation.
The consequences of this policy change are dire for these rural-owned enterprises. Unable to register for VAT in time or meet the financial obligations associated with compliance, these businesses face the imminent threat of closure. Tuckshops, which have long served as a crucial source of sustenance and economic activity in these areas, now find themselves on the edge of extinction, effectively pushed out of business due to the VAT requirement.
For the ruling party, ZANU PF, this turn of events is particularly concerning. These rural areas have traditionally been strongholds of support for the party, proving instrumental in their political success. As the closure of businesses becomes a painful reality for the community's own supporters, ZANU PF may face a decline in popularity and undermine its standing among its own base.
Critics of the new budgetary measure argue that while the government's intention may be to expand the tax base and boost revenue, the selected method may prove detrimental to the very people it claims to represent. The lack of sufficient time for small businesses to adjust, coupled with the financial burdens imposed by VAT registration, exacerbates the challenges faced by rural communities already grappling with a troubled economy.
Given the potential economic repercussions and political implications of this decision, various stakeholders, including civil society organizations and opposition parties, are urging the Finance Minister to reevaluate the policy and explore alternative solutions. Suggestions include providing support and guidance to rural-owned businesses to aid in their VAT registration process or implementing a phased approach to compliance to avoid an abrupt and detrimental impact on the affected communities.
As the implications of this budgetary decision begin to unfold, it remains to be seen how ZANU PF will navigate this delicate situation. Should the closures and economic downturn persist, the party may face significant challenges in maintaining its support among its rural base, potentially setting the stage for a shift in the country's political dynamics.
The requirement for VAT registration, though seemingly innocuous, presents a formidable obstacle for numerous rural enterprises, such as tuckshops and small-scale businesses, located in areas such as Harare South, Epworth, and other regions known for their allegiance to the ruling party. The vast majority of these businesses are not currently registered for VAT and face uncertain prospects of being able to comply with the new regulation.
The consequences of this policy change are dire for these rural-owned enterprises. Unable to register for VAT in time or meet the financial obligations associated with compliance, these businesses face the imminent threat of closure. Tuckshops, which have long served as a crucial source of sustenance and economic activity in these areas, now find themselves on the edge of extinction, effectively pushed out of business due to the VAT requirement.
For the ruling party, ZANU PF, this turn of events is particularly concerning. These rural areas have traditionally been strongholds of support for the party, proving instrumental in their political success. As the closure of businesses becomes a painful reality for the community's own supporters, ZANU PF may face a decline in popularity and undermine its standing among its own base.
Critics of the new budgetary measure argue that while the government's intention may be to expand the tax base and boost revenue, the selected method may prove detrimental to the very people it claims to represent. The lack of sufficient time for small businesses to adjust, coupled with the financial burdens imposed by VAT registration, exacerbates the challenges faced by rural communities already grappling with a troubled economy.
Given the potential economic repercussions and political implications of this decision, various stakeholders, including civil society organizations and opposition parties, are urging the Finance Minister to reevaluate the policy and explore alternative solutions. Suggestions include providing support and guidance to rural-owned businesses to aid in their VAT registration process or implementing a phased approach to compliance to avoid an abrupt and detrimental impact on the affected communities.
As the implications of this budgetary decision begin to unfold, it remains to be seen how ZANU PF will navigate this delicate situation. Should the closures and economic downturn persist, the party may face significant challenges in maintaining its support among its rural base, potentially setting the stage for a shift in the country's political dynamics.
Source - Andile Ncube
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