FINANCE, Economic Development and Investment Promotion minister Mthuli Ncube has said the government will make most taxes and fees to be paid in Zimbabwe Gold (ZiG) to bolster the use of the six-month old currency.
ZiG, which debuted in April, had found its feet until the last two months when authorities slept on the wheel.
Monetary authorities were forced to devalue the local currency on September 27 by 43% to ZiG24,39 per dollar.
Speaking during a dialogue with development partners in Harare on Wednesday, Ncube said the government will require taxpayers to settle a sizeable proportion of their obligations in local currency.
“Already, customs duties are now payable in local currency. Going forward and in line with the de-dollarisation roadmap, other taxes will also be paid exclusively in local currency, including payment for government services,” Ncube said.
The move is meant to create demand for ZiG, thereby stabilising the exchange rate.
At the launch of ZiG, central bank chief John Mushayavanhu said there would be demand for the currency as corporates settle their quarterly tax obligations.
There was no legislation to create that “stampede” for ZiG and the second quarterly payment date went unnoticed on June 25 when companies settled 25% of their corporate tax.
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The third quarterly payment date was September 25 and there was no such demand.
In fact, there was more demand for the greenback, which triggered a rout of ZiG, forcing authorities to intervene two days later.
There have been mixed messages from authorities on the use of ZiG despite the existence of a de-dollarisation plan that would install ZiG as a sole currency.
In formal channels, the use of ZiG has been on the increase, doubling to 40% from 20% in April.
While monetary authorities are promoting the use of ZiG on one hand, the government appeared to have been singing a different tune on the other hand after it allowed wheat farmers to be paid exclusively in United States dollars.
The move, according to critics, showed that the government was paying lip service to the use of a local currency.
We are of the view that the government should take the lead in the use of ZiG.
Although some services can be paid in ZiG in government offices, there have been complaints that officials claim the point-of-sale machines are not working, which would force one to pay in United States dollars.
The ZiG is backed by US$450 million in foreign reserves, as of October 10, according to Reserve Bank of Zimbabwe governor John Mushayavanhu.
Critics say government services such as passport fees should be paid exclusively in ZiG to buttress the use of the local currency.
Government, however, argued that there is an existing arrangement which demands that the fees be collected in United States dollars.
We exhort the government to walk the talk on its plans to buttress the use of the local currency.
Mixed signals will work against the government’s sixth attempt to establish a stable currency in over a decade.
This is the last chance saloon to get it right after the mistakes made in the past six months if the ZiG is to stand a chance amid rising re-dollarisation tempo.
American author and orator John C Maxwell says a “man must be big enough to admit his mistakes, smart enough to profit from them and strong enough to correct them”.
