admin
Golden Sibanda
The Zimbabwe Revenue Authority (Zimra) will next week finalise the finer details of modalities of the fuel rebate system, which is part of concerted efforts by Government to curtail potential price spiral for goods and services emanating from higher fuel prices.
The fuel rebate is exclusively meant for registered business entities that are also tax compliant, Finance and Economic Development Minister Professor Mthuli Ncube said when announcing the rebate plans two weeks ago.
Rebate defined
A rebate is an amount paid by way of reduction, return, or refund on what has already been paid or contributed. Its effect is to reduce cost of goods or services.
A straight price reduction, through rebates, on some models would have a domino effect on all products in a line and Zimbabwe’s case the expectation is that the rebate will hold stead transport fares.
Zimra on Wednesday submitted suggestions from captains of industry and Government stakeholders on how best to implement the fuel rebate system, after gathering input at meetings held on Monday and Tuesday.
Since fuel is a major cost driver in production and provision of goods and services, there was concern within Government that businesses may increase prices of goods and services, on the back of the recent fuel price hike, making it harder for the already burdened citizens.
This comes after President Mnangagwa a fortnight ago week announced increases in prices of diesel and petrol to eliminate arbitrage opportunities in the industry, believed to be contributing to the fuel shortages in the country.
The price of petrol was increased to $3,31 per litre from an average $1,38 and $3,11 per litre of diesel from about $1,32, as part of measures taken to align domestic fuel prices to trends prevailing in the region.
The price increase came as the fuel shortages in the country had continued to degenerate into a palpable crisis, with demand outstripping supply at a time the country- a net importer of fuel, faces shortage of foreign currency needed to import the precious commodity.
It has since emerged that the high demand for fuel included appetite from unscrupulous individuals who were hoarding and reselling the fuel on regional or domestic parallel markets at premiums, taking advantage of the currency situation in the country.
Also, the currency disparity between local forms of payment, Real Time Gross Settlement, bond notes and other electronic modes, meant local fuel had become comparatively cheaper than the rest of the region, which saw foreigners in transit preferring to re-fuel in Zimbabwe.
Zimra on fuel rebate
Zimra commissioner general Faith Mazani said this week that the State revenue collector held meetings with business member groups and Government stakeholders on Monday and Tuesday to receive their inputs.
“We are still engaging with the Ministry (of Finance and Economic Development) to refine the inputs that came from engagements we had. We have already had meetings with industry sectors; on Monday and with Government stakeholders on Tuesday.
“We made submissions to the ministry and we are waiting for the response. We are waiting for the ministry’s guidance on the inputs that came from industry and from the Government stakeholders,” Mazanhi said.
Industry and Commerce Minister Mangaliso Ndhlovu, said the Ministry of Finance was in charge of the process of coming up with the modalities of the fuel rebates for registered and tax compliant businesses.
“For progress on that you may need to talk to the permanent secretary in the Ministry of Finance, (George) Guvamatanga,” Minister Ncube said yesterday.
Guvamatanga’s mobile phone went unanswered when his comment was sort for an update on the issue. This comes amid concern delaying the rebate may see some businesses hiking prices.
Government has also come up with a framework for calculating and monitoring fuel pricing on a weekly basis so that adjustments are made as and when necessary.
Industry’s take on rebate
Confederation of Zimbabwe Industries president Sifelani Jabangwe, said that he was hopeful that businesses that have already increased their prices would reduce them once the fuel rebate comes into effect.
“We hope that those that have increased prices when they get the rebate should also have some reduction in prices because that will be double dipping,” he said.
Confederation of Zimbabwe Retailers president Denford Mutashu, said while Government had promised to seek input from retailers on the issue of the rebate, his organisation was still to be consulted. He, however, said CZR will always contribute to all Government led efforts to rebuild the economy.
The interventions by Government are contained in two statutory instruments Petroleum (petroleum products pricing) Regulations 2019, announced by Energy and Power Development Minister Joram Gumbo and Customs and Excise Duty (Tariff Amendment) Notice, 2019 announced by Minister Mthuli.
Industrialists and economists said the two legislations will eliminate pricing arbitrage opportunities through high excise duty (45 cents to $2,31 per litre of petrol and 40 cents to $2,05 per litre of diesel or paraffin).
The excise duty make up nearly 90 percent of the fuel price hike effected by Government midnight on Tuesday this week, making it less profitable to buy and resale outside Zimbabwe.
Bongani Ndlovu