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NATIONAL ASSEMBLY HANSARD 1 SEPTEMBER 2022 VOL 48 NO 75
PARLIAMENT OF ZIMBABWE
Thursday, 1st September, 2022.
The National Assembly met at a Quarter-past Two O’clock p.m.
(THE DEPUTY SPEAKER in the Chair)
FINANCE BILL [H. B. 9, 2022]
First Order read: Committee Stage: Finance Bill [H. B. 9, 2022].
House in Committee.
On Clause 7:
(v)HON. MUSHORIWA: Thank you Hon. Chair. I think what we need to find out from the Hon. Minister, we do not have a problem in terms of the validation of reduction in terms of levies pertaining to the cost of fuel but I think what we need the Hon. Minister is probably to lay before this House in terms of the NOCZIM debt that we have been contributing on the fuel? How much is still outstanding? For how long are we going to pay for it? What other levies still exist on our fuel component and how long will we continue to manage them? I thank you.
THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. PROF. M. NCUBE): Hon. Chair, I would like to thank the Hon. Member for the intervention. I will be very happy to bring a statement to explain the exact levels that are in place but also the extent to which we have managed to extinguish the NOCZIM levy. I am happy to bring that information. This Clause was just merely to validate some of the Statutory Instruments that we used for bailing the fuel levy so as to reduce the impact of the global fuel prices on the domestic prices. I thank you.
Clause 7, put and agreed to.
Clauses 8 to 17 put and agreed to.
On Clause 18:
(v)HON. MUSHORIWA: Hon. Chair, we have got a challenge as we alluded to during the Second Reading. This clause to suspend the collection of tax on exportation of unbeneficiated platinum, we do not believe and I think the Hon. Minister is aware. In 2019, we had a same clause in his Finance Bill and we were told that the platinum miners were going to come up with a refinery of platinum by 2021. We do not want to believe that we should continue to allow these miners and I think Hon. Members, well pertaining to how much these platinum mining companies are actually switching and taking advantage of Zimbabweans. We cannot therefore allow a question that will suspend the operations or the collection of tax on exported raw platinum.
Hon. Biti, during the Second Reading, highlighted that we have got Bindura platinum that could actually do the processing and we do not understand why the Hon. Minister, when he is busy looking for revenue to finance the budget - remember we are doing a supplementary budget. Supplementary budget means that our initial budget was not well funded. To that extent, we will not want to have a situation where revenue which is supposed to come from these miners can actually be suspended. There is no justification and no reason. Accordingly, I urge the House to actually support that the Minister should delete this proposal from this Finance Bill because it will not help us as a country.
These miners need to contribute and contribute massively to the fiscus. They are taking everything, platinum, gold, lithium and other minerals that they are not declaring. So we cannot allow it to happen. I thank you.
(v)HON. T. MLISWA: Thank you Hon. Chair. I need to concur with Hon. Mushoriwa in that we must be locking at resource mobilisation. We know we had a policy which spoke about resource mobilisation. Resource mobilisation was about us mobilising resources with what we have. For now, it is the minerals which are doing well. Platinum is doing well in terms of the world market prices, so is Lithium. Chrome as well, you find it in Zimbabwe and gold. Why are we not building our resource mobilisation from that because that is the key to us breaking through and meeting all the economic challenges? There is no reason why Zimbabwe should be in this situation. We need to maximise and get as much as we can because like I said the other day, the Indigenisation Act has been suspended, it does not empower us at all and there is no law currently doing that. So this is the opportune time for us to craft this and to give a percentage. The Chinese themselves have said they have a lot of resources that they are mining in this country but we never know how much we are making out of them.
Finally, I want to ask the Minister from the resource mobilisation strategy that we have how much was mobilised. We need to know that and that is a basis for us to say should we take more or less but for now it seems there is no figure. . So I totally support that this is the time that Zimbabweans build their own country through the resources that we have. So we must make no apology. If they say that they have put in more money in terms of the Finance Bill when the direct investments were there to say no the Zimbabwean structure in terms of doing business is not good and 51, 49 is not good. Let it be suspended.
The Finance Bill can even be suspended but there is still no improvement traction in terms of us maximising, getting the money. So they lied to us when they said they were going to put money. When we relaxed and said the Indigenisation Bill must not be there, what have they put in and look at what was put in when it was there. So I totally concur, we must maximise on this.
(v)HON. MARKHAM: In view of what Hon. Mliswa has just said and Hon. Mushoriwa, we talk about gold, platinum and nickel. Could the Minister also explain to us when it comes to beneficiation and also when it comes to the mining rights, what is the national fiscus actually receiving from diamonds? I see no taxes on diamonds, I see virtually nothing being brought into the fiscus by diamonds but at Chiadzwa - we have mining going on full steam ahead. We have large private aircrafts flying in and out weekly there. What is the country and even the local people of Chiadzwa benefiting from the diamonds? What have we got in terms of royalties, what have we got in terms of processing? Could the Minister explain to us why we are actually mining the diamonds because I see nothing in the national fiscus to our benefit? Thank you.
THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. PROF. M. NCUBE): Thank you Mr. Chairman. I thank the Hon. Members for their contributions; very important indeed. I recognise Hon. Mushoriwa, Hon. Mliswa and Hon. Markham. They were making similar contributions. They were basically arguing that we should not suspend this beneficiation tax. It should be maintained because they believe that the mining sector is not contributing enough to our revenue raising efforts.
Colleagues, we really took time to think through this as Treasury, as Government and consulted widely. Also, I urge Hon. Members to read this clause as they consider it combined with Clauses 31 and 32 which pertain to the increase in the royalty for platinum sector and lithium from 2% to 5% because those were considered together. Although they sit apart in the Bill, those really go together in terms of the analysis.
So we consulted widely, the industry itself and then ZIDA in terms of those who spend time trying to attract investment and then what we saw that this beneficiation tax was found to be punitive, it was discouraging investment and therefore it had to go. We then argued as Government to say no, we cannot just remove this then we need some compensation elsewhere. We then proposed that we want to raise the royalty. So that again we workshopped with the industry.
In addition to that, I invited the IMF, the Fiscal Affairs Department in Washington to do an analysis of the fiscal regime for our mining sector and lo and behold, they came up with a similar proposal which is; suspend this beneficiation tax but then increase the royalty. Initially they had a high figure, so we ended up settling on a royalty of 5%. So if we could rise together, I think we have made progress. On the royalty, we will be getting those resources for sure, but on a beneficiation tax you only get that from selected mines that have not complied by the royalty, it is a sure thing. Of course, we could argue about the level of the royalty. Members could make a contribution on that but I think on the issue of the beneficiation tax, this decision was taken in order to really ease the environment for doing business. It was felt that its presence was prejudicing and discouraging investment. I thank you.
Clause 18 put and agreed to.
Clauses 19 to 21 put and agreed to.
(v)HON. ZUVA: On a point of order. My point of order is, the Minister did not…
THE TEMPORARY CHAIRPERSON (HON. KHUMALO): May I order Hon. Zuva on line to please either come to the House because we cannot even see you on the system here – [HON. MEMBERS: Inaudible interjections.] –
HON. MUTSEYAMI: On a point of order Mr. Chairman. My point of order is, let us respect Hon. Members who want to debate. I am sure as a House, we appreciate that we use the hybrid system. So those who are on line, if they want to debate, let us give them a chance. This thing of saying you are not here, so you cannot debate is not the way to go Hon. Chair. Let us harmonise our debates and move on smoothly. We have been doing a good thing from yesterday and there is no need to be emotional about this thing – [HON. MEMBERS: Inaudible interjections.] –
Disorder in the House
On Clause 21:
THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. PROF. M. NCUBE): I move the motion standing in my name that:
21 Amendment of section 38 of Cap. 23:12
(1) With effect from the 22nd February, 2019, section 38 (“Manner in which tax shall be paid”) (4) of the Value Added Tax Act [Chapter 23:12] is amended by the deletion of “section 41 of the Reserve Bank of Zimbabwe Act [Chapter 22:15]” and the substitution of “section 41 and 44C of the Reserve Bank of Zimbabwe Act [Chapter22:15]”.
(2) For the avoidance of doubt, it is declared that Statutory Instrument 142 of 2019 does not override an express statutory provision of an Act of Parliament contrary to its provisions, there being nothing in the enabling provision under which that Statutory Instrument was made (section 64 of the Reserve Bank of Zimbabwe Act [Chapter 22:15]) to the effect that regulations made thereunder shall or may have that effect; accordingly section 38 of the Value Added Tax Act [Chapter 23:12] cannot be construed in a manner that—
(a) puts into question the lawfulness of the receipt by a registered operator of foreign currency in payment for goods and services supplied by the operator; or
(b) relieves a registered operator of liability to pay in foreign currency for goods and services paid for in foreign currency that were supplied by the operator, as required section 38 of the Value Added Tax Act [Chapter 23:12].
HON. BITI: Section 21 is a dog’s breakfast. What does it mean? What is the Minister trying to do in Section 21? I just want to read. It says “For the avoidance of doubt, it is declared that Statutory Instrument 142 of 2019 does not override an express statutory provision of an Act of Parliament contrary to its provisions, there being nothing in the enabling provision under which that Statutory Instrument was made (section 64 of the Reserve Bank of Zimbabwe Act [Chapter 22:15]) to the effect that regulations made thereunder shall or may have that effect;..” Accordingly, section 38 of the Value Added Tax Act [Chapter 23:12] cannot be construed in a manner that puts into question the lawfulness of the receipt. Is this a head of argument? Are we before a Judge? What is the Minister trying to do in an Act of Parliament? This country is governed by the principle of legality. The principle of legality means a law must be clear and straight forward so that the ordinary average citizen understands of what is happening. What is the meaning of Section 21? It is a total dog’s breakfast. Is it a head of argument? Are we in a court of law? What is the law that he is trying to do here? What is he trying to say here? Even my own dog will touch this section. It does not mean anything – [HON. MEMBERS: Inaudible interjections.] - What is the Minister trying to do in this section? I seek clarification.
HON TOGAREPI: With all due respect Hon. Biti may not have understood that clause but the repeat of the word “dog” is not parliamentary for him to be doing that. It is an insult. He must withdraw that.
HON. PROF. M. NCUBE: I thank the Hon. Member for that intervention and for seeking clarification. It looks very wordy and dense but the intention is very simple. The simplicity is this way. In the VAT Act, the definition and recognition of electronic currency as legal tender was not aligned to the Reserve Bank Act where that definition of electronic currency and legal tender is well defined. This is as of 1 February 2019. All this clause is trying to do is just trying to align the VAT Act to the Reserve Bank Act in recognition of electronic currency. That is all. It looks very wordy and complex but all it is trying to achieve is definition and recognition alignment. I thank you.
HON. BITI: But it is not doing what he is saying. If he wanted the clause to do what he is saying, then he would say, for the purposes of VAT Section 44 (c) of the Reserve Bank Act shall apply. Put differently we can levy charges in US dollars or in multiple currencies. He can say that and also in electronic currency. That is what he needs to say. It is not saying that. It is not his problem – [HON MEMBERS: Inaudible interjections.] - let me debate. You do not understand these issues. It is not the draftsman, so this provision needs to be withdrawn and re-drafted in proper, simple English. Right now it does not make sense, it is meaningless; you do not draft heads of arguments in an Act of Parliament – you do not do that. So, he should not inherit the baby that is not his, this baby is a bastard child. Let the draftsman take responsibility of his actions.
HON. MATANGIRA: On a point of order! The way we are talking in this House is unparliamentary. When we talk about a bastard, a dog’s breakfast, I do not think we know what we are doing. Can the Hon. Biti withdraw his statement?
HON. BITI: Dogs breakfast is a metaphor; there is nothing offensive about it. Dog’s breakfast simply means something that is confused; that is normal, ordinary English. If the Hon. Matangira does not understand that, it is not my fault. If he did not study William Shakespeare, that is not my fault – [HON. MEMBERS: Inaudible interjections.] –
THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. PROF. M. NCUBE): I think as a learned friend, Hon. Biti should just take his time. I would like to urge my learned friend just to take time to go through that phrase. If you read the first paragraph, it says ‘with effect from the 22nd February 2019, Section 28, the manner in which tax shall be paid, which is in the currency of trade of the VAT Tax Act is amended by the deletion of Section 41 of the Reserve Bank Act and the substitution of Section 41 and Section 44 (C) of the Reserve Bank Act’.
We are saying that for avoidance of doubt, just in case anyone is in doubt, you then go on to add that paragraph 2, that is all. This is just to elaborate. You will realise this paragraph is okay, it is very wordy and there is nothing wrong with it, I know in certain terms it is unnecessary. I thank you.
HON. BITI: The esteemed Minister says that subsection 2 is for the avoidance of doubt. It is an explanatory note. So, if you are now going to explain, you must actually make it simpler so that a person understands.
The explanation must add value, so I have no problem with section 25 (1). My point of attack is section 25 (2) which says, ‘for the avoidance of doubt, it is declared that Statutory Instrument 142 of 2019 does not override an express statutory provision in an Act of Parliament’. Let us stop there Hon. Chair.
What this paragraph is saying is that a statutory instrument cannot override an Act of Parliament but why does that thing need to be in an Act of Parliament? We all know here as Members of Parliament that a statutory instrument cannot override an Act of Parliament. So why do we need to put it here? What is it helping? This is a law; it is an Act of Parliament. So the problem is not him, the problem is the person who drafted this Statutory Instrument, just leave Section 25 (1), that is the law. The explanation is not necessary. If you want to put an explanation and if you go to this Bill, there are explanatory notes that are written. That is where you put the explanation. In a court of law now, in interpreting a provision, you are allowed to go to the explanatory notes but you do not put the explanation in the provisions, it is a draftsman issue, not the Hon. Minister’s problem.
HON. PROF. M. NCUBE: Hon. Chair let us just delete. The drafter wanted to make sure that there is no avoidance of doubt but if there is a feeling that this does not add value, we just delete it, that’s all. I thank you.
We are deleting Clause 21 (2) of paragraph 2 which begins, ‘For the avoidance of doubt…’ We can cut and paste it on to the explanations at the back. That is in order. I thank you
Amendment to Clause 21 put and agreed to.
Clause 21, as amended, put and agreed to.
On Clause 22:
HON. MUSHORIWA: Thank you Hon. Chair. This clause, Hon. Members once debated it in the Second Reading. The basis upon which we disagree with this provision is that paying tax is a civil matter. It is wrong to criminalise someone who has failed to pay his/her tax. It is wrong to sent someone to prison primarily because you have taken it as a criminal matter. You will note that in terms of taxation in this country, everybody knows that as Zimbabweans, we are one of the highly taxed people in the world.
Naturally, the provision that is in place is sufficient. There is no need to criminalise non-payment of taxes. Let us make sure that we continue with the civil penalties that are currently in existence. They are sufficient. If they are not sufficient, this is where we then would ask the Hon. Minister to bring in the ZIMRA Amendment Bill so that at least we could try by all means to enhance measures to make sure that the processes of taking vetting taxes from people or companies becomes easier. Where we need to give ZIMRA and the tax man some teeth, let us give the tax man some teeth, but let us not do it in a manner which contradicts with the principles of civil issues. There is no criminal element in all this. Failure to pay tax and I think the Hon. Minister will agree that this section, we need to remove the criminal element and then we come back with a proper Bill before this House to deal with issues pertaining to the challenges where a person is failing to pay tax. I thank you.
*HON. CHINOTIMBA: Thank you Hon. Chair. I stand to add to this section which we are dealing with, Section 22. It is very painful for us as blacks in our lives. What it means is, your employer may delay to give you a salary but it becomes your fault at the end of the day. The sentence is just too much, two years in jail is not practical. I think the Minister needs to re-visit and make it a civil case and not make it a criminal offence for failing to pay taxes. Some of us as employers are struggling to pay those taxes. So I think we must find a way of making those people pay taxes instead of imprisoning them.
If someone gets their money from a company, if someone had paid the money from somewhere else and they fail to pay the tax, surely they need to pay their taxes. If you send them to jail, we would have destroyed many families because of one person. What I think is, we have real criminals who are selling foreign currency and are not being arrested. They are causing the rise in inflation because they are selling money, but we have never heard that one of them was imprisoned. We are leaving them but someone who fails just to pay tax; we want to imprison him or her for two years. I think those who would have failed to pay taxes should be penalised by other means and not jail. Those who are selling money should be sent to jail, even for 10 years because if we do that to one person, it will deter the rest. We should do like what South Africa is doing and things will go well for us. I just wanted to add my voice to this section on criminalising those who fail to pay tax but I support that people should pay taxes. We should find ways to compel them to pay those taxes not sending them to jail because companies will close and many people will lose jobs. Many people will suffer. I thank you.
HON. NDUNA: Thank you Hon. Chair. Clause 22 that speaks to and about imprisonment of those that would have not paid tax; the Constitution of Zimbabwe is sui generis. It is in a class of its own. It is supreme and Section 2 says, “any Act of Parliament that is ultra vires the Constitution should be repudiated to the extent of its inconsistency”. It is my humble plea to the Hon. Minister, that we continue to align our Acts of Parliament to the Constitution. There is no dearth in Zimbabwe in terms of the law. We can use the Criminal Law Codification and Reform Act, in particular there are statutory bodies which do not remit their taxes for argument’s sake, may be they are supposed to remit their monies to ZIMRA and such like, those people should be criminalised. According to the Criminal Law Codification and Reform Act and Criminal Procedure and Evidence Act, there is no dearth in terms of sections that can criminalise such people.
To then say for a civil debt or a contract that Government or ZIMRA has with business persons to criminalise. I will read verbatim, what the law says. Section 49(2) that deals in part with personal liberties actually goes on to say, “no persons may be in prisons mainly on the grounds of liability of inability to fulfill a contractual obligation”. It is cast in stone. If we are not happy with the law, we need to change the law. We cannot circumvent it and we are not here to change this law but to deal with delegated authority that the Minister seeks to impose. This is delegated authority and it is dead on arrival and should not see the light of day.
I urge the Minister to consider that there are a lot of laws that can deal with such delinquent behaviour of those that tried to circumvent the law but imprisonment is not part of them. Abuse of office and criminal or otherwise has its sentences that do not speak to and about the issue of section 49(2). I thank you.
*HON. CHINOTIMBA: I want to tell the Minister that the propensity of wanting to send someone to prison is not right. This is an issue of the taxes that sent us to war with the white settlers. It is an issue that you just did not perform the task according to what they want and they are now sending you to prison. This is exactly what sent us to war because they tell you that you failed to pay levy tax, you are now going to prison. This is the same with what the Minister has done. The Minister made just a slight mistake and did not understand the issues that he is dealing with. Can you tell us that we need to construct more prisons because people failed to pay tax? Two years in prison - mandatory.
I do not think this is fair. We want to prepare a good law. It seems as if you want to punish people. Minister, I do not think that there is a problem here. You can just stand up Minister and say I had made an error here and I cam correcting it. That will be all.
HON. BITI: Thank you very much Mr. Chairman. The criminalisation of failure to pay tax is very regrettable. It is very wrong, particularly Value Added Tax which is what we are talking about. Value Added Tax is paid on the sale of goods or services and you know that the majority of our business in Zimbabwe, we actually operate on the basis of invoices that you issue out. Once you issue an invoice, then you wait for your customers or your clients to pay as Hon. Chinotimba stated. The law now says because we use an accrual system of accounting, the obligation to pay VAT does not arise on the payment of the invoice. The obligation to pay VAT arises upon the levying of the invoice. It is immediate.
Now you know Mr. Chairman that our economy is very difficult. You know that our people are struggling. You know that the economic climate is a challenged one. Many people are not paying their debts. The Government knows it, the RBZ knows it. The Government has just spent over US$2 billion purchasing non-performing loans from the banking sector. At some stage 79% of bank balance sheets were actually none performing loans. When we were young, we used to say musoro wakazara nezvikwereti. Most people in Zimbabwe are in debt, but the obligation to pay VAT would have arisen. So you are going to prosecute this poor business person who is unable to pay his VAT not because he does not want to pay but because his own customers have not paid. That is why we cannot criminalise. That is why we should not criminalise.
I know there are companies, if you take the Pick and Pays and OK Bazaars of this world, VAT is paid immediately. If such a customer does not pay VAT, the Zimbabwe Revenue Authority has been bestowed by operation of law with many legal instruments that allow them to get summary payment. One of the instruments is a garnish. So you can garnish immediately and many people have been garnished. That works and in summary, the garnish of the Zimbabwe Revenue Authority Mr. Chairman, does not require a court order, but the most important argument is that this is a civil obligation. Tax is a civil obligation. Let us leave the police out of taxes. Let us leave the State out of it. The only time where there is criminal liability is where there is tax evasion, where there is tax avoidance. That is a different category, but with VAT, you are an ordinary working business. Your people are not paying taxes.
I am a lawyer, we bill out. It takes an average of four months before an average invoice is paid out. So we have to fork out our own monies to pay the VAT. So Mr. Chairman, not only is this unconstitutional. I do not want to repeat the arguments that have been made by advocate Nduna and I want to commend him for grasping the principles very quickly, we are very proud of him. He has made a very solid argument on why you cannot criminalise civil obligations. It is a constitutional provision. Civil imprisonment has been outlawed as well as what the Minister is trying to do. But from an accounting point of view where we are using the accrual method of accounting, why are you penalising me when my clients have not paid?
Thirdly, it is common cause, Mr. Chairman that our economy is in a difficult situation. We know that the majority of our people are living in poverty, we know that. So we ask the Minister to drop this provision. The Zimbabwe Revenue Authority has sufficient instruments that have been used to recover taxes. That is why we are now 42 years of independence and there is no Minster of Finance and Economic Development who has tried to do what he is trying to do. That is why ZIMRA has been in existence since 1990 and it has not asked for those powers. They are totally unnecessary, they are totally illegal and they are totally unwise. I thank you very much Mr. Chairman.
HON. GONESE: Thank you very much Mr. Chairman Sir. I want to add my voice in respect of Clause No. 22 and the first point I want to make is that when you look closely at the intended provision and I would ask the Hon. Minister…
THE TEMPORARY CHAIRPERSON: Hon. Member, you are on Clause 22. Can you sit down, I want the Minister to respond.
THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. PROF. M. NCUBE): I thought that in the spirit of cordiality I must save Hon. Gonese the pain of having to present a long argument. Hon. Chair, Members of this august House have made very eloquent arguments as to why we cannot proceed with this clause in its form. I thank Hon. Nduna and I have never heard him this eloquent. I must say I am impressed today. Others like Hon. Biti, Hon. Madzimure and I am going to say Hon. Gonese even though you did not speak, I recognise you and then Hon. Mushoriwa and Hon. Chinotimba. Let us drop this clause from the Finance Bill. I thank you.
Clause 22 put anddeleted.
Clause 23 put and agreed to.
On Clause 24:
HON. MUSHORIWA: Thank you Mr. Chairman. Clause 24 seeks to charge 40% on the sale of a marketable security that is sold within 270 days and for the avoidance of doubt, 270 days is nine months. My objection to this is in twofold. The first issue is that 40% is a figure which is too high. I think we need to ensure that there is no reason for us to charge punitive taxes at 40%, primarily because in an economy like Zimbabwe and holding onto a stock for more than nine months has got its own inherent risk. People, companies and individuals have to try by all means to do whatever it takes to make sure that they survive under an unpredictable economic environment.
So, it is wrong to punish somebody primarily because you have decided to dispose your stock in less than nine months. You can hold it for six months and you want to dispose it. In any event, there is nothing wrong for one to hold his shares or security for two weeks, one month just the idea of trying to survive, the idea to make profit and taking advantage of the macro-economic circumstances prevailing.
My view is that 40% is out of this world and it is too much. The net effect is that it will affect the marketing of these securities. So I urge the Hon. Minister to consider retaining the percentage as it was rather than to come up with a punitive taxation system as he wants to do under this clause. I thank you Chairman.
HON. BITI: I thank you Chairman for allowing me to debate. The rate of 40% is extremely high and we are dealing with securities or put differently, shares on the stock exchange. So we are dealing with assets that are naturally fungible, in other words, that are shares. It is ironic that we are on fungible tutorial assets. We are levying a higher rate of capital gains than for the movement of assets. We understand why the Minister did what he did on the 7th of May when the President made the announcement. The announcements were made to primarily deal with speculative behaviour in the market but we should be careful of making permanent short term solutions that were meant to address a short term problem, namely the problem of overheated market in respect of which speculation was rife.
We are now suffering the law of unintended consequences and the unintended consequences in this matter is that we have now effectively killed the Stock Exchange. We have not killed the stock market but the stock market was created for a reason. The stock market was created in respect of people that they would actually raise them. That is why companies do what are called IPOs. So we are now killing the Stock Exchange and if you have any doubt, look at the indexes. The Zimbabwe Stock Exchange is the fastest rescinding Stock Exchange in the last four months since May of 2022. It has lost over 60% of its value on the entire counter.
These people who had invested on the savings have lost money. I urge the Minister to put a provision of say six months but not to make it permanent. I also urge the Minister to reduce the punitive measures because 40% is too much. I also need to remind the Minister that the reason why these markets exist in the manner that they do is because they are speculating. You will buy an Econet share because you know that in three months, it will declare a dividend and you will go to GMB, PPC or Old Mutual. That speculative component is always there. Capitalism is the nature of business and he knows that. He is a capitalist because you used to own a bank. Let us not be victims of the law of unintended consequences. Section 24 is bad law and bad policy. It was created for a reason and that reason I suspect is gone. I suspect that the real reason why there was speculation was that the Government itself was generating too much money, particularly on the issue of capital and because that tap has been shut, we have actually seen the levels of speculation going down. This provision is unnecessary. The Minister must make it time bound. He must say by June of 2023 the rate of tax will be 40%, thereafter let normalcy prevail. Let the stock market do what it does best, which is to raise capital including speculative capital. It is an instrument of capital; it will always play a role of capital but it helps the Minister on price discovery. Without a functional market, how do we know the value of Econet and all these 62 or so listed stock counters?
I urge the Minister to think carefully because this is a move that is terrible. This is a move that will accelerate depreciation and recession of our economy. We cannot use a hammer to kill a mosquito. Unfortunately, that is what we are doing. I thank you very much.
HON. RAIDZA: I want to support the provision that is being proposed by the Minister. Like what other Hon. Members have said, I am reading this amendment in the context that the Minister is trying to deal with speculative behaviour that has caused our economy to be where it is today. I want to support that but with an amendment on the number of days that maybe 270 might be on the higher side but I propose six months. Many of our people want to make a quick buck and by doing that, they do not look at the implications of their behaviour on the economy. If we can allow six months rather than nine months, I think it will be a way of trying to strike a balance between genuine investors and those who are into speculative business. That is my submission Hon. Minister that 40% can remain but the timeframe can be reduced so that at least we end up having a bit of discipline in our stock exchange. When the stock exchange was established, the whole idea was to help our economy but crooks have been taking advantage of seeing opportunities of making quick bucks in that area. By bringing the 40% and reducing the number of days, in a way we will try to strike a balance and at the same time trying to achieve what we want to achieve by having this clause. I thank you.
*HON CHINOTIMBA: Firstly, I want to thank Hon. Biti. Ever since he was in MDC Alliance, he never acknowledged that there was a duly elected President but right now he was making reference to the President of Zimbabwe. He now knows that there is a President. I was really happy seeing him debating and making reference to the President. Keep it up.
I do not have much to say except for the fact that the 40% must remain and we reduce the number of months to six months. I want to thank all those who have debated.
HON. NDUNA: I ask that the amount of days go lower than the 270 that had been proposed by the Minister on two reasons. The first one is; according to a precedent that has been set, I know in the High Court and Supreme Court, there has been a challenge that was given by a respondent after an applicant sought to get money for maintenance when the child was now over 18 years. The man had defaulted to pay maintenance charges but when the application was lodged to the High Court, the court did not see favour in granting the applicant’s prayer because the child who was deemed to be awarded maintenance was now over 18 years. What the law says is that when the reason for the law falls away, the law falls away. That is the first issue. Now that the child is 18 years the law falls away.
You have just created the stock exchange which is US dollar based in Victoria Falls to treat the issue of speculation on the stock exchange. That one is very solid. The reason you created or you seek to create this penalty per se, is to treat the issue of speculation which was rife and has been treated by the stock exchange. If somebody wants to invest in a solid stock exchange, globally they can go to Victoria Falls on that US dollar based stock exchange. So you have treated it. The speculation has fallen away because of the treatment. The law cannot be applied in the mould and form that you propose. You obviously have your reasons but the reason for treating it in the manner that I have spoken about falls away. When the reason for the law falls away, the law falls away because you have created the Victoria Falls stock exchange.
The second reason or otherwise that I am not sure of gives the issue the impetuous where I am giving you benefit of doubt and I say reduce the number of months maybe to 6 months as proposed by Hon. Chinotimba, let us say 6 months as opposed to 270 days. So, those will be my submissions and they are well founded in the law. I thank you.
(v)HON. MARKHAM: The reason that this clause is necessary is purely because we have uncontrolled inflation and currency rates. In order to stop this speculation, we ought to have this better understanding. However, you are killing a major investment and fundraising sector of the economy by stagnating it and as a result of that, it is becoming increasingly more difficult for all the counters to start raising money which they cannot do.
It also creates another problem for pensioners and they have to find a safe keeping for their money. Now, what I would like to propose to the Minister without going on too long is very simple. It is that both the 40% and the 270 days be reduced on a sliding scale. So, for the first three months, if he wants 40%, let him do it but the next three months, it must be 20% and the last three months, 10% capital gains tax. The reason I am saying that is that we are already three months or four months down the line from what we propose in the clauses. I thank you.
HON. PROF. M. NCUBE: I thank the Hon. Members for their contributions and all of them without exception have asked for some moderation on this Clause in terms of the penalties. However, before I then go on to propose some moderation, let me give the reasons why we introduced this kind of policy. It was to deal with speculation. In our analysis and understanding, we found that the traders in the parallel market, first of all, those in the auction and those in the parallel market in general and the stock market were working together to collude and drive down the value of our currency. So, we had a typical speculative bubble at prey and also in a sense, an asset price bubble due to high inflation but the issue was the behaviour in the stock market. That arbitrary behaviour was driving down the value of our currency and we had to act – that is what we did when the President made the announcement.
However, again in the spirit of compromise because everyone who has spoken has asked for some moderation, I propose that we reduce the holding period from the 9 month to 6 months or 180 days. I thank you.
(v)HON. MAKHARM: I appreciate the concession by the Minister but I believe that when he reduces to 180 days, he should also consider that of the 90 days, the 40% comes down to 20%.
My second question is that if the Minister knows who the people are who are speculating in connivance with the authority and the pushing of the arbitrage behaviour, why does he not stop them trading or ban the whole thing that upsets everybody.
HON. PROF. M. NCUBE: I thank Hon. Markham for that innovative proposal around creating a sliding scale but my view is that it will just complicate our collection system. We are already having difficulty with stock brokers implementing any sum of withholding tax; they claim all manner of difficulties and things are still simple.
My feeling is that if we introduce now a sliding scale, it will just get more complicated even though it sounds quite noble. However, on dealing with those who are speculating, if we know them, we are actually dealing with them. There is a specific case of a player who was buying shares and speculating in a very big way, very obvious way and we dealt with them directly but we do not know then who is next and usually you know once they have done it, once the deed has been done on the currency. So, we want to make sure the damage is not done at all, that is why we want to make sure that it is punitive enough. I thank you.
Amendment to Clause 24, put and agreed to.
Clause 24, as amended, put and agreed to.
On Clause 25:
HON. MUSHORIWA: I think in the spirit of the concession by the Hon. Minister under Clause 24, we seek that the Minister could extend that concession to six months under Clause 25.
HON. PROF. M. NCUBE: Clause 24, 25, 26, 27 all pertain to market securities and they are a package around this restriction on trading and I agree with the Hon. Member that the 6 months applies right through. I thank you.
Amendment to Clause 25, put and agreed to.
Clause 25, as amended, put and agreed to.
Clauses 26 to 29 put and agreed to.
On Clause 30:
HON. MUSHORIWA: Clause 30, we raised this issue
extensively during the Second Reading and I just want to remind the Hon. House on two issues. The Portfolio Committee on Budget, Finance and Economic Development and even the Portfolio Committee on Defence and Home Affairs have had this issue. I also want to believe that even the Portfolio Committee on Industry and Commerce was also supposed to do the tour of borders.
The question of border ports authority, we do not know whether it has been accepted and that Cabinet has made that decision and that is where the country is actually heading to. The challenge that we then face is to have the Hon. Minister coming before this august House under the cover of the Finance Bill and want ZIMRA to be the temporary border ports authority. There are several problems with such a scenario. The first one is that in all countries where there is a border ports authority, it has never been under the revenue authority and ordinarily, Zimbabwe cannot be an exception.
More importantly Chairman, if you go to the border today, you have got your ZIMRA, immigration, defence where you see our soldiers, environment and a lot of others. Any attempt to go to a border ports authority needs to be something that has been really debated, subject to scrutiny. Our position and our cry is that whilst I personally do not have a problem, I do not have a problem in having a border ports authority. I actually believe that this should come under a Bill before Parliament so that people of Zimbabwe have the chance to comment and debate, and this House should also do the same.
Right now and I wish Hon. Mayihlome was here, the Chairperson of the Portfolio Committee on Defence and Home Affairs. I think he will actually have huge challenges in having ZIMRA taking the lead. Given the fact that we are already in September, I think the best thing is for the Minister to delete this entire Clause 30 and allow a proper process to happen. I think we owe it to the people of Zimbabwe in the various committees that we sit, to make sure that we go out there, consult the people and have a properly drafted Bill before this House. I thank you.
HON. MADZIMURE: The Minister should have been aware for a very long time that there is need to have a coordinated approach at the borders. For us to create a temporary structure that is not supported by a serious analysis of the various arms that are going to feed into this authority is going to cause us lot of problems. Whenever you want to put up a structure, you must first think of the key result area, what is it that you want to achieve and achieving it for who? If we look at what the Minister intends to achieve, it appears it only has to do with revenue collection but collecting revenue without the full coordination of the various arms and then knowing exactly what their roles are going to be will create a serious problem.
This, we are speaking from experience after having visited borders not less than three times and understanding what we simply have to do, which is something that we should have started doing a long time ago. We are trying to create a very good infrastructure. If you go to Beitbridge today, you will see that we are coming up with a perfect structure but this is a physical structure that must be supported, a human resources structure, organisational structure that will effectively and efficiently work. Under the circumstances, we are just rushing to create something that is going to give us a lot of problems.
Whenever you create an authority that is not supported with something that is really documented or apparent that one can actually see when you look at a structure, the moment you are told of a structure you must be able to go through the structure and say this is what I am seeing. We are not going to have this by simply saying we are now having a temporary ports authority. We already have problems with ZIMRA itself. The relationship between the army, police, port health and all these other departments are not working in a coordinated manner with ZIMRA at the moment.
I was of the opinion that if the Minister could leave the situation as it is and concentrate on persuading his colleagues in Cabinet to come up with what they perceive as the border ports authority and bring a Bill to this House to introduce border ports authority, otherwise rushing this thing will create more problems for us. Whenever you start establishing something that is not well planned and then try to correct it, you are already influenced by the mistakes that you have already made. It will be very difficult for you and as you become so defensive, you think what I had done in the first place is good and you cannot create an organisation under those circumstances.
Whenever you do not have an organisation existing, you have a perfect opportunity to put together something that is well-thought and has a well-established system that flows well. I am of the opinion that if the Minister could defer this and prepare a structure and a Border Ports Authority Bill that is brought before this House so that we achieve what he intends to achieve. Thank you.
HON. GONESE: I just want to add my voice in respect of this particular Clause 30. Firstly, I would really want the Hon. Minister to clarify for us the rationale and thinking behind the bringing in of this clause because as I see it, you are looking at something which he wants to introduce as an interim or temporary measures. As Hon. Members have spoken before have indicated, when it is brought through an Act of Parliament which is envisaged in terms of that particular clause, the relevant Portfolio Committee will be able to carry out public hearings. They will be able to get the sentiments and the views of all interested stakeholders but when it is introduced through an amendment to the Finance Act. All that will not take place and as a result, we then have a law which is rushed and which may not be in the best interest of the country. It is for this reason that I want to join the other Members who have spoken before me and request the Hon. Minister to drop this particular clause and if he and his colleagues in Cabinet have thought it through, they can then gazette a Bill which would come through the normal process. As for now, I think that this particular clause is not justified and I would request the Hon. Minister to drop it for the reasons that are from both a procedural and substantive point of view. It is not something which is beneficial to the long term interests of our country.
HON. TOGAREPI: Hon. Gonese took some of my views. I am of the opinion that there is too much chaos at the border posts. I have this challenge – do we have to allow the situation as is or we need to come up with a measure that can help us, but I have only one worry Minister. How long is this authority going to survive? Is it going to be for a long time and how long is that long time? Is it going to be under your Ministry and what relationship will it have with the Ministry of Transport? I think we need some clarification on what informed you to come up with this idea? I think what you want to cure is there and indeed there is a challenge and there is that vacuum which needs to be dealt with. However, we still need more information why it has to go through ZIMRA and who else is involved in coming up with that. For us to leave the whole place empty and nobody doing anything about it, I think we are also perpetuating a challenge to our country but it is something that we need more information on as to why we have used this root to get where we want to go.
HON. BITI: I want to add my voice to support the strong reservations about this creature that Hon. Members are expressing. The first fundamental point I have, which I raised in my Second Reading contribution on the debate of the Finance Act is that the Act itself must not be abused to deal with non-revenue measures. It must not encroach on other things. The Finance Act is a Bill which is sui generis, to borrow the language that Hon. Nduna has just learned. It is a special Bill, a money Bill provided for in the Fifth Schedule. It has special privileges and its primary role is to deal with the raising of taxes. It is a revenue generating instrument, so it cannot encroach on other areas that require a relevant Minister to prepare principles of the Bill, which principles will then be debated by Cabinet. Once Cabinet buys that principle, the principle then goes to the Attorney-General who then drafts a Bill which goes to the Cabinet Committee on Legislation. The reason why the entirety of Cabinet is there is that those are the Executives and they must put their heads together. Directors, Principal Directors would have put their expertise. A ports authority is an extensive process and the first weakness of what the Minister is proposing is that he is seeing a ports authority as a way of facilitating revenue. So, he is therefore appropriating the ports authority to the Ministry of Finance. With great respect Mr. Chairman, a ports authority is about the country’s security, the integrity of the country’s borders. So, the primary responsibility of a ports authority has nothing to do with money or revenue that he wants. It is about the country’s security. Where is the Commander of the Defence Forces here? It is his baby in terms of the Constitution because it is protecting the territorial integrity of Zimbabwe vis-a-vis the external. That is its first function and ZIMRA has no capacity, they do not know what security is all about. Security is not stationed in people wearing a uniform like those at the airport. That is not security but there are a lot of things that will be happening there which you and I do not know. So he is usurping the function of the Minister of Defence and Commander of the Defence Forces and he cannot do that, waita mutete, iri igomo hombe iri and you cannot touch that.
Secondly, it is infrastructure and the Minister responsible for that must deal with it and that is the Minister of Transport who is responsible for all the infrastructure in this country. So, you cannot usurp the function and authority of the Minister of Transport. That is why I said there has to be principles which all the concerned Ministers should come and put their heads together such as the Minister of Defence, Minister of State Security, Minister of Transport and the Minister of Home Affairs because there is immigration. One of his biggest weaknesses is that the proposal he is putting here is touching on areas already covered by other laws. Let me read the wide mandate and ZIMRA cannot do it. He is saying “the function of the border ports authority shall be;
- to plan, provide, maintain and improve infrastructure at ports of entry”. That is not the core business of ZIMRA. The only Ministry with that mandate is the Ministry of Transport. So what the Minister is doing is very dangerous because he was given power in terms of Part 5 of the Constitution of Zimbabwe of overseeing revenue matters in terms of Section 7 of the Public Finance Management Act. He is Treasury and responsible for the macro-economic stability of the country. Infrastructure does not fall under his mandate, so he is usurping the powers of the Minister responsible for infrastructure.
He is saying
- “to arrange for the provision of services such as water, light, power and sewerage and telecommunications within ports of entry”. That is not his function but that is Local Government. So, he is now stealing the mandate and responsibilities of other Ministers and he cannot do that Mr. Chair. Number three, to control land use within ports of entry and decide optimal usage of that land, that is Ministry of Lands, Agriculture, Fisheries, Water, Climate and Rural Resettlement and these things are covered by Acts of Parliament. Here I am demonstrating his invasion on the portfolios of other Hon. Ministers, he cannot do that.
Number four, to coordinate general activities of the ports of entry in respect to the entry and exit of the people and cargo – that is now security, immigration and home affairs, he cannot do that. ZIMRA itself does not have the capacity to do these things. Mr. Chairman, you are no longer looking at me, I know that my face is ugly.
An Hon. Member having not bowed to the Chair.
THE TEMPORARY CHAIRPERSON (HON. KHUMALO): Order, order, Hon. Member, you have to bow to the Chair when you pass. You may proceed Hon. Biti.
HON. BITI: Mr. Chairman, airports are ports of entry but airports are already covered by a separate Act of Parliament, it is called the Aviation Act of Zimbabwe which sets up the Civil Aviation Authority of Zimbabwe (CAAZ) and the Airport Company of Zimbabwe. The CAAZ, in terms of that law, is the power that controls that airport and the Immigration Department reports to them; and Customs also reports to the CAAZ. What he is trying to do here is not reconciled now to these other Acts of Parliament; in particular, I have given example of the CAAZ.
So, I want to say that the Hon. Minister is treading on dangerous shoes, in particular, the security shoes. Borders are about security; borders are about the territorial integrity of the country. I think this provision must be struck off. However, I hope then Cabinet, can then form a sub-committee where the relevant ministers can agree on principles, and take some of the ideas that are here. Then draft principles that will go to Cabinet, and if Cabinet approves, it goes to the Attorney-General, Advocate Prince Machaya and Draftsman Dias to draft the Bill. I thank you very much Mr. Chairman.
(v)HON. MARKHAM: Thank you Hon. Chairman. My only contribution is very simple and it is that I am averse to ZIMRA taking over even on a temporary basis because in the Budget and Finance Committee, we heard submissions to both management and in particular the workers stating that they are under capacitated, under rewarded. One of our recommendations was 3% regulations should go to them. I thank you.
THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. PROF. M. NCUBE): Thank you Hon. Chairman for the opportunity to respond to the contributions by various Hon. Members. I have noted Hon. Mushoriwa, Hon. Madzimure, Hon. Gonese, Hon. Togarepi, Hon. Biti and Hon. Markham who have contributed to debate on this Clause 30.
Let me start with the rationale just to partly answer to the question by Hon. Togarepi. The rationale is simple which is, we have chaos at the borders. You go to Forbes Border Post, Beitbridge Border Post, there is chaos. We need leadership, order and an institution that will coordinate, control movement and activity at those borders. We currently do not have that. We have agencies that are there together with ZIMRA, Defence, Home Affairs, even Agriculture et cetera. There are a lot of agencies that are there but there is not proper coordination or structure to guide them so as to make a very effective border post where there is order, that is the first thing.
The second thing is that we cannot leave things as they are. Something has to be done. Number three, we are already working together as Cabinet and the President has created an Inter-Ministerial Committee chaired by the Minister of Transport and Infrastructural Development and the Minister of Finance and Economic Development is Vice Chairperson. This Inter-Ministerial Committee includes the affected agencies, so there is Home Affairs, for example, Defence and others who are going through the role of coming up with the principles that will be taken to Cabinet for approval. Then it goes to the Cabinet Committee on Legal Issues and then the Attorney-General and other Draftsmen. It does not have to be the other who was mention as the drafter but there will be some drafter. Then it eventually goes to Cabinet as a draft Bill then eventually, it makes its way to Parliament as a Bill to support the creation of a Border Authority. So that is coming, that is on the way but it takes time.
So in the interim, what do we do? Are Hon. Members suggesting that we leave things as they are? Is that the proposal and leave the chaos as is? I also want to know if they want to leave things as they are? I thought this was an interim solution. I have noted the debates around the list of issues, functions of the Border Authority that are in Clause 30, that would have been highlighted by Hon. Member to say ZIMRA cannot do this, ZIMRA cannot do that.
ZIMRA will be working with those other agencies already. At the moment, there is just no coordination in a manner that is enshrined in some law of sorts and that is all we are trying to solve. We need those agencies to coordinate, they provide security. The Ministry of Defence and War Veterans will provide the security that it provides, Home Affairs will do what it does and other agencies will do what they do but now it will clear, they are also contributing and there is a leader which is ZIMRA in this case. ZIMRA cannot provide those services, they will be provided by others. Even in a border authority, a border authority is not going to create its own new police force, immigration system and soldiers to patrol the borders. It will use the same soldiers in the Ministry of Defence and War Veterans. So the same resources will be drawn upon even by a new legally constituted border authority.
So I also have a question. Are Hon. Members happy that we leave things as chaotic as they are at the border and they are comfortable with that situation and they will sleep well in that situation? I thank you Mr. Chairman. I would like to know.
HON. MUSHORIWA: Thank you Hon. Chairman. The Hon. Minister said something fundamental. He told us that there is a taskforce already and the taskforce, Mr. Chairman you heard, is actually led by the Ministry of Transport and Infrastructural Development. It is not led by the Ministry of Finance and Economic Development. His Ministry is actually the deputy.
Hon. Chairman, the reason why we are saying this, and Hon. Members of this House understand it. Hon. Minister, we visited the border, we know the chaos that is there. Nobody is happy with the chaos and the lack of coordination that is there. What we disagree on and disagree with you is for you to smuggle this one under this Finance Bill. You cannot do it.
The other alternative which I do not like, I am aware that in the question of the Presidential Temporary Powers, he has got a lot of challenges. I think that if the President has agreed as the Hon. Minister alluded to, let the President come up with a different platform and a Statutory Instrument to do that which has nothing to do with the Finance Bill.
Hon. Togarepi had indicated and which was a valid question. You cannot come up with something and say it is temporary. Temporary for how long, and from the process that he alluded to, I think, all of us know that for the Bill to go, all the processes and principles, until it goes to the Attorney General and all the other stuff until it comes here, it will take a long time. So the temporary that he is referring to is semi-permanent in a way. So we cannot allow it Chairman. Yes, we have to solve a chaotic situation but let us not create chaos to solve a chaotic situation. The best thing – the President is the head of the Cabinet, let him come up with another mechanism, even if it means that he short circuits the process of having these ministries meet overnight, burn the midnight candle and the Attorney General as well so that we fix the problem, rather than for us to have it under this Bill. It cannot do this country justice. I thank you Chairman.
HON. CHIKWINYA: On a point of order Mr. Chairman. Recordings of Parliament remain alive as long as there is a Parliament in Zimbabwe. The matter that we have been dealing with, on the 17th June 2020, Hon. Mthuli Ncube answering to a question by Albert Nguluvhe and I refer to the Hansard of the same says, ‘As a Ministry, we have noted the concerns that the local Member of the National Assembly for Beitbridge East, Albert Nguluvhe and I will engage other line Ministers in Cabinet so that we operationalise the National Ports Authority (NPA)’. Why did he use the National Ports Authority? It is because in 2014, Cabinet approved the establishment of National Ports Authority (NPA) to coordinate operations and attending to the teething challenges of the ports of entry. So we are not here to create a new item. Whatever Hon. Biti was talking about, the principles, the drafting and everything has already been done and it started 2014. The issue is that ZIMRA collects an estimated USD170 million at the border facility weekly. So the Minister of Finance is comfortable using ZIMRA as a collecting mechanism and collecting vehicle but ignoring all the other issues incidental to the ports. This is why the Cabinet in 2014 managed to establish a National Ports Authority. I beg Hon. Minister to simply go back to Cabinet, withdraw and make alive the principles which are agreed to already by Cabinet and I refer you to the Hansard of 17th June, 2020 where he was answering questions to Hon. Albert Nguluvhe. Thank you.
HON. GONESE: Thank you very much Mr. Chairman. I want to respond to some of the issues raised by Hon. Minister. The first one is - what would Hon. Members want? In responding to that, one of our concerns emanates from the fact that this is open-ended. It simply says until such time. It can take forever. As Hon. Chikwinya has pointed out, this has been something which was debated even two years ago in 2020. Now we have got the problem that this amendment, if it is passed by this august House, it is an Act of Parliament and it becomes valid but at the end of the day, it is unlike the Presidential Powers Temporary Measures. As much as I do not agree with the principle of having them, at least they are for a temporary period. If a period of 180 days lapses then they fall away and an Act of Parliament has to be brought through the normal way but with this proposed amendment, if we pass it, it means that it can be there ad infinitum. There is no limit as to how long it is going to remain on the Statute books because the provisions, the way it is cultured does not even give such a timeframe. This is the reason why I want to agree with Hon. Biti that if you are bringing it in this particular manner, it is creating problems. At the end of the day, our response to the Minister is very clear and straight forward. They should then as Cabinet expedite the process and since it is something which has already been discussed, they already have the principles. All that they need to do is to ensure that once the Cabinet Committee on Legislation is able to meet, they can then gazette the Bill. Once the Bill has been gazetted, this august institution will then be able to do its normal processes whereby the views of the public are taken into account in terms of the provisions of Section 141 of the Constitution of Zimbabwe. When that happens, we then pass a law which would have got inputs from the people of Zimbabwe and which will then last the fullness of time. That is all we are asking the Hon. Minister to do.
We are just putting the ball back to him and his colleagues to just work overnight to ensure that the Bill is brought in a proper manner and this august House will be able to pass a good law as is provided for in terms of Section 117 and 119 of the Constitution of Zimbabwe.
HON. RAIDZA: Thank you very much Hon. Chairman. I have a different proposal on this clause. We understand from the submissions by the Minister and the other Hon. Members that possibly the procedure that we are trying to take might not be right but I have a proposal that is it not wise that we put a sunset clause because the Minister is saying he wants to deal with the chaos. At the same time we are saying this discussion of establishing the same authority started some time long back but it looks like it is not getting traction. My proposal is that for the sake of trying to strike a balance, can we not put a sunset clause to say possibly, a year, two years or so, so that we have this issue being currently obtaining at the borders dealt with whilst we are putting our house in order as a country. Thank you very much Mr. Chairman.
HON. NDUNA: Thank you Mr. Chairman. I spoke here on this pedestal and platform on the Second Reading where I said - besides that there was traction in terms of establishment of road ports authority, there is a perceived or there is going to be a Bill coming in to Parliament. Indeed, if we put in our Bill tracking, we might see that it is still to be contemplated or is being contemplated. Be that as it may, I came here and looked at who was the cash-cow of the Beitbridge Border Post in particular or indeed all other border posts and we observed that it was VID for the good reason that there is vehicular transport and there is weigh bridges. Weigh bridges cost USD1700, about USD2 million to establish. Already you can see who is the master of the ports authority. If you go in there and you have an overweight at a rate of USD50 per tonne overweight, there is obviously knowledge to who it is that is the boss at the ports authority.
There is the Limpopo River Bridge and there is money coming from that bridge. There is the Victoria Falls bridge, there is money coming from there and who presides over it? It is the VID and VID is one of the 13 parastatals under the Ministry of Transport. It is my thinking that let us not change the winning team. I am saying the separation of vehicular and human traffic at the border post has, it will and it can increase efficiency. You have seen what has happened at the Beitbridge Border Post and it was just yesterday, His Excellency, Dr. E. D. Mnangagwa, the President, made it very clear in no uncertain terms; he was quite instructive to Hon. Minister Mhona to say that you have established this institution, it is my thinking that you should now concentrate on the Beitbridge-Bulawayo-Victoria Falls Highway. That was very instructive.
In my view, this is sometimes how you get the law. Law comes out of such instructions. It is my thinking that let us not go back to that archaic, moribund, rudimental and antiquated way of dealing with modern day issues. You remember on the tollgates, in the medieval error, we used to have ZIMRA officials standing in the rain with small booklets where they would collect revenue on behalf of ZINARA. Then afterwards, they would get 10% income out of it. All that is in the past. Thanks to yours truly, I was chairman of the Transport Committee when we computerised that issue because we were not supposed to be like BBC (born before computers). We were supposed to link all systems so that they police each other, then revenue gets to be generated en masse. We also avoid, avert and completely annihilate the scourge of revenue leakages and the financial hemorrhage, just through computerisation and making sure ZINARA is collecting its own revenue.
There is what is called Civil Aviation Authority of Zimbabwe. We came here and we proposed a Bill that disintegrates the two between the regulator and the operator. You cannot have your cake and eat it. Where you are the referee, the player and otherwise; you are collecting the revenue and you are supposed to audit the revenue. It does not work like that. It is my fervent view, clarion call and hope that this issue of fast tracking this Bill should come to a screeching halt and the Hon. Minister should expunge this clause and go forward. Let us continue in the way we are dealing with the issue there.
The chaos has been removed because the vehicular and human traffic in the way that they have been separated at Beitbridge Border Post, which brings in three quarters of our GDP, is second to none. You saw the pictures yesterday. That is all that was needed because indeed if the vehicular and human traffic is amalgamated in the manner it was before, you are losing four cents per litre assuming you land after 24 hours; assuming it is a truck laden with fuel. When you land inland, you are losing four cents per litre. If it is sugar, you are losing two cents per tonne of sugar, something like that.
So the separation is well applied and if you had to say for instance, just for a little while, two or three months, who presides as a ports authority chairman or otherwise, let it be the Ministry of Transport so that the Minister of Finance can audit the Minister of Transport; let him remit. ZIMRA is the Minister of Finance. He cannot audit himself. Certainly, it is an incestuous relationship. It does not augur well. This is why I asked ZIMRA from the tollgates to take leave so that they can audit the Ministry of Transport through ZINARA.
There is a platform called Icecash that is already in play. There is an issue called ZIMTIMS (Zimbabwe Transport Integrated Management System). It makes sure all the transport systems are managed under that platform. So we are about to complete the circle if we link the border posts in that ZIMTIMS. So let us not create the confusion, let us complete the circle. If you go to the Ministry of Transport, ask him about ZIMTIMS and ask him about Icecash. Icecash has got all the insurance companies on it and it is moving very well. All you need is to just say for the usage of that platform, the percentage that is remitted to operators should even be 0.00001. It should not be humongous. That is the issue that I thought I should bring to the fore. Imagine this is coming from chairman of the district, Lameck Nyamarango in Ward 24, in Bosbury District and Sarah Chikukwa in Chegutu. These are old people but they think they know separation of powers. I thank you.
THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. PROF. M. NCUBE) Thank you Hon. Chair. Hon. Members have been debating this clause for a while now and it is quite clear that the mood is that we should really drop this clause out of the Bill. I therefore propose that we drop it. – [HON. MEMBERS: Hear, hear.] - I just want to say that I am concerned that the process of creating the border authority will take a while. Then in the meantime, the chaos will persist at our borders but I will drop it nonetheless because that is the mood in the House. I thank you.
Clause 30 put and deleted.
On Clause 31:
HON. MUSHORIWA: Thank you Hon. Chairman. Clause 31 seeks that what is remitted to the Zimbabwe Revenue Authority (ZIMRA) in terms of Subsection 2, shall be paid half in foreign currency and half in local currency. As we stated during the Second Reading, these miners sell their products in foreign currency. They should just pay their dues also in foreign currency. There is no justification to then say Unki Mine pays half in USD and then pays half in ZWD. What is the rationale? I think by allowing these miners to pay half in United States dollars and half in local currency. They are given the opportunity of taking the money and burning it on the parallel market and then pay at the official rate. We cannot allow that Mr. Chairman.
Chairman, miners are selling their products only in foreign currency. They are not selling in Zimbabwean dollar. That is our bone of contention and if they are getting their money in foreign currency, why should we give them the leeway to then go on the black market and burn money and then pay in RTGS. Let them just pay in foreign currency. That is our plea Mr. Chairman. I thank you.
(v)HON. MARKHAM: Chairman, I would like to just thank you very much for the recognition. I would like to back Hon. Mushoriwa. I do not see any reason why there should be a 50/50 split in currency when mining houses should be earning all their money in forex. They have the added advantage of cutting out any middle man because they must pay their forex. Thank you.
(v)HON. R. R. NYATHI: Thank you Hon. Chair for giving me the opportunity to add my voice on this clause. I think that it is fair and prudent that anyone who sells in forex should pay using foreign currency. If one sells in RTGS or in Zimbabwean dollar, he must pay in Zimbabwean dollar. It is prudent, it is fair. So I submit that notion Hon. Chair.
HON. MADZIMURE: Minister, by allowing these miners to pay half in RTGS and half in United States dollars, we are simply promoting corruption because it is natural that you would want to take advantage of the prevailing situation knowing that we have got the bank rate which is probably around 480 these days and 850 on the parallel market. Any reasonable person or any person who thinks well will obviously just take the other half, go and convert it into RTGS and gain another half. It is natural.
So this is precisely what the Minister is encouraging these miners to do and by so doing, it is going to affect the poor because inflation is going to be pushed up. All those people who have been going to the parallel market are these big people who have got a lot of money who can even go and buy at any rate, but the consequence is that inflation will go up. After all Hon. Mushoriwa has stated it quite clearly that all what they trade in is in United States, all what they sell is in United States dollar so why would we want to give them an option to take advantage of the situation.
To be honest Mr. Chairman, if we look how desperate we are as a country to collect revenue, it should have been effected even well before this date because we are losing a lot of money from royalties. The minerals are all that we have and the most unfortunate thing is that minerals do not last forever. So we must take advantage of the situation but for us to allow them to pay in two currencies, it does not make sense.
HON. BITI: Thank you Hon. Chairman. I really do not understand the Minister’s motive behind this provision. I come from the position that the Government requires foreign currency because of our huge import requirements. We need about USD2 billion probably just on fuel. We need close to USD1 billion on drugs and other ancillaries. We need a huge amount of money to import power from entities such as ESKOM in South Africa and HBC in Mozambique.
The main export earning right now is actually commodities and minerals and minerals have now surpassed agricultural commodities yet we are now saying royalties should be paid half in United States dollars and half in RTGS. If you look at clause 312(a), the Minister does not give discretion. The Minister says royalties shall be paid 50% Zimbabwean dollar, 50% United States dollars. So he makes a mandatory, a peremptory provision, pay 50/50 but you need foreign currency and we are talking of minerals. We are talking of minerals that are ephemeral, that are not permanent that belong to the people of Zimbabwe.
Mining houses have done little over the last hundred years that they have been mining in Zimbabwe. If you go to Renco Mine in Chiredzi, in Masvingo, it is only 90km from the main Chiredzi Road but it is gravel. That mine has been around for 60 years and they have failed to put a tarred road from Renco Mine to Masvingo North Constituency. Go to Kadoma, there is a gold mine there called Rio Tinto. They have been mining for over 8 years. Kadoma has nothing to show for that mine. Go to Bikita Minerals, Masvingo has nothing to show of the minerals that have been extracted from Bikita for the last 40 years. So why are we giving them this concession?
The Minister’s obsession has been with inflation and the collapse of the exchange rates. All the measures that we have been debating, the measures around 7 May have been measures around tightening the screws on broad money in the market but here because of reasons we do not know you are now opening the screw because you are now basically saying to mining houses you can go and sell your currency on the black market and then use it to pay your royalties. So on the contrary, the measures will not strengthen the local currency as the Minister said in his second reading speech. It will actually undermine the Zimbabwean dollar because it will increase the supply of the Zimbabwean dollar and therefore undermine the exchange rate and he knows that those mining houses are not fools. They will not go to banks and exchange their foreign currency at an artificial bank rate. They are rational human beings and so they will unleash their money on the parallel market, thereby undermining the currency and undermining the exchange rate. We do not want to make laws for certain individuals.
We do not want to make laws for cartels and when I see this law, I think of Kuda Tagwirei. His Landela Mining entities, he now owns eleven gold mines – five that came from ZMDC and three that came from Mzi Khumalo Metallon. Are we going to continuously make laws for Kuda Tagwirei? To me, this is a Kuda Tagwirei clause because he has got so much cash and he does not know how to launder that cash. So he says to his friend George Kuvamatanga, please allow me to pay royalties in local currency- why? There is no rationale at all.
They are earning USD and even pay USD. The Minister needs USD. If he does not know that he needs USD, he must go and look at the state of Parirenyatwa Hospital right now. There is no dialysis machine working in the country, there is no cancer machine working in the country; they all require foreign currency. This is strange, we do not want to be captured and we do not want people that are captured. I thank you very much.
HON. KASHAMBE: Thank you for awarding me an opportunity to debate on this important clause. I would like to appreciate the contributions made by Hon. Biti. However, what is mining, how many categories of miners do we have especially in Zimbabwe? We have got big established mines, the Unki, Zimplats and others but we have got our artisanal miners, amakorokozas who are the majority of the miners in Zimbabwe and they have employed enough young people in this country.
So what do we do to promote them to grow into big mines? If they sell their gold they are getting half in local currency and half in USD. Why do you not allow the small scale miners to pay half in local currency and half in USD and the big mines can pay wholly 100% in foreign currency? This is to promote the vision of our President, of a USD12 billion. I thank you.
HON. S. SITHOLE: Thank you Chair. I was coming in to support what was said by Hon. Kashambe because the Minister must take the difference between the big mines and small scale mines. There are three categories. There are big mines, medium mines and small scale mines. I support what Hon. Kashambe said that small scale mines which are called korokozas can be allowed to pay half USD and ZWL half but these big mines are supposed to pay USD. I rest my case. Thank you.
(v) HON. R. R. NYATHI: Thank you Hon. Chair for giving me another chance to debate on this issue. The situation right now with the small scale miners and large scale miners is that they are paid in USD everywhere you go and that is the prevailing situation on the ground. We propose that anyone who is getting any income after trading in USD must pay in USD. Whoever is paid in ZWL must also pay in ZWL. I think that is proper and prudent. We need to understand that most of our people who are receiving this USD are going to the parallel market and selling the USD at a higher price whereas the Minister is struggling to reduce our local currency so that it goes down.
Every time he is fighting very hard but these people are getting the money in USD and they go and sell them. It is now the men in the streets that are telling the Reserve Bank of Zimbabwe that the currency must go up. In some of the hotels that we are living in, I ordered food and I said - can you deliver it to my room and I was told it was USD5 a tray. I said it is fine you can bring your pos machine and then I will swipe. When they came, they said no, it is equivalent to ZWL1 200 per USD which means for USD5, I paid ZWL6 000. I thank you.
HON. NDUNA: There is Section 368 in the current Mines and Minerals Act and I will restrict my debate to the law. Section 368 outlaws prospecting without a licence. It is so powerful that it can repeal the Agrarian Reform Act of 2000 in that small scale farmers and large scale farmers, A1 and A2 can be thrown off their land, the formerly marginalised black majority can be thrown off because of that section. It criminalises them and you can go to jail without an option of a fine. Section 3 of the Gold Act criminalises possession of gold without a licence. I am trying to center on this antiquated piece of legislation we call the Mines and Minerals Act. Section 343 of the same Act, you will find that who is supposed to have power is the District Mining Commissioner but we currently have a Provincial Mining Commissioner who is not appointed according to the law, operating with impunity and removing people from their mines without a court order.
The reason I bring up all these points is because the current Mines and Minerals Act does not promote the blacks. It does not have the small scale miners; it impedes upon their progress of empowerment and having money. I therefore propose as follows; that the small scale miners are the cash cow in the gold sector for the Minister currently, giving more than 30 tonnes of gold per annum. This year it is envisaged they might even go to a 100 tonne mark. This is small scale miners who are artisanal miners most of the time. I ask that because they are being paid half-half, the Minister can therefore get those royalties and taxes in RTGS.
To be a small scale miner, there is a threshold in terms of production. Once they break that ceiling, treat them like large scale miners irrespective of that, we have not repealed the archaic, moribund and rudimentary piece of legislation we call the Mines and Minerals Act of 1951. In my view, this is the opportunity for small scale miners to be in partnership with large scale miners so that the small scale miners can be empowered, use that platform and pedestal to empower the formerly marginalised black majority and buy pieces of equipment. If there is circumvention of the US dollar taxes by the large scale miners, it should be because they have partnered small scale miners. The import of that is that the small scale miners will then grow arising from the partnership with large scale miners. There is a deliberate empowerment tool of the small scale miners.
I can tell you this now that the foreign currency you are trying not to get from the large scale miners is not going down in terms of benefit to the localities. I said this in the Second Reading that Section 13 (4) states that, the minerals should benefit the localities from where they are extracted. We have Zimplats, the second largest producer of platinum in Africa with no benefit to Chegutu. We have Pickstone Peerless Mine, the largest gold reserve in the whole of Africa and they are conducting open cast mining with no benefit to Chegutu. To get to that mine, 25km from Chegutu, you have to go through a dirty road, second to none. All they ever did was to build a small little primary school in order to hoodwink the Member of Parliament. So, these people should not be treated with kid gloves. They should be forced to benefit the locality. If they do not adhere to the ethos and values of the Constitution, they should be brought to order. I say this because I reside where there is ubiquitous amount of mineral wealth being extracted. Let this be a benefit to the small scale miners.
By the way, I am christened the biggest artisanal miner, mukorokoza mukuru in the whole country because I stand for these people including accommodation. I am standing for them and I am getting incarcerated by whomever.
It is the issue of Isaiah 6 verse 1, ‘the year King Hosea died, I saw the Lord’. Let the artisanal miners be empowered because of your Clause 31 today, here, and now. I thank you.
HON. PROF. M. NCUBE: I thank the Hon. Members for their contributions because they are all in agreement with some variation here and there – Hon. Mushoriwa, Hon. Chidziva, Hon. Madzimure, Hon. Kashambe, Hon. Nduna and Hon. Nyathi. Why did we come up with this policy which we are now seeking to make sure that it is included in the Finance Act? There are three reasons; the first one is that the large scale miners are giving up 40% of their export revenues through the retention scheme which has been supporting the auction. Secondly, we have said to them that they have to pay for their electricity and they are big electricity users in foreign currency because some of the electricity has to be imported. ZESA needs the foreign currency to import that power. These big miners are having to pay for their electricity in foreign currency. Thirdly, as Government, there has been a serious argument from various policy analysts and so forth that Government must also show that it supports its own domestic currency, the Zimbabwe dollar. It should therefore accept more of its taxes, levies and royalties in the domestic currency.
We analysed that proposal from various analysts including industrialists and miners and we felt that it is a good idea, it seems to make sense. Therefore, we were happy to accept 50% of the royalties in Zimbabwe dollars. If we did not do that, miners would struggle to have enough foreign currency to import necessary raw materials, equipment, retool and so forth. They have made representation to us which we felt was sound, hence this proposal of 50-50 payment in Zimbabwe dollars and US dollars for the royalties.
I now turn to the issue of the small scale miners. In our research, we also found out that some of the large scale miners make use of the small scale miners to avoid certain levies and payments, including royalties which are higher for them compared to the small scale miners.
I am afraid that the proposal of saying let us allow small scale miners to pay their royalties in ZWL only, the large scale miners will take advantage of that; pay them a small fee to accept their produce and their own, then claim that this is produce from small scale miners. We then receive all our royalties in ZWL but we do not want to do that, we want 50/50.
So, this will not help the situation, it will make it worse but also the small scale miners are already having to pay a lower level of royalties in any case. We are also setting up that USD10 million revolving fund from the SDS to support especially the gold miners. I am happy to say the fund will be launched in a couple of weeks; we are ready now with the participating banks.
So colleagues, there is some rationale behind this proposal of 50/50 payment in either currency because this is supporting the very miners who have invested large sums of money into this country. As Government, we are fairly comfortable, it is one of the cocktail of measures that we put in place and only one of the cocktail of measures and together these measures, we feel as Government that they are working. I really urge members to accept this clause, we can always evaluate in future, and there is some sound reasoning behind it. I thank you.
Clause 31, put and agreed to.
On Clause 32:
HON. MUSHORIWA: When we say we have substituted the word platinum, then we say ‘platinum,’ why not just mention the other minerals that are within the PGM group rather than to leave those commas there unless we are saying we are leaving it because we do not know other minerals that may also be there. What is the rationale of not just completing sub-clause a and b?
HON. PROF. M. NCUBE: Hon. Chair, I agree with Hon. Mushoriwa. We will add the names rather than putting dots – that is in order.
Amendment to Clause 32, put and agreed to.
Clause 32, as Amended, put and agreed to.
On Clause 33:
HON. MUSHORIWA: I want to ask the Minister to expunge this clause from this Bill. As we indicated to you Hon. Chair, the Hon. Minister cannot do what he proposes to do. He wants to increase the board of directors of ZIMRA to a big number of about 10.
The Committee on Budget and Finance has already tabled a report in this august House and there was a petition which came from the revenue authority union. One of the issues that we raised in that report which has been adopted by this august House was that the board of directors of ZIMRA contravened the public entities corporate governance act which does not allow senior Government officials and Permanent Secretaries to sit on a board of parastatals.
ZIMRA Board Chairman allows the Permanent Secretary of Ministry of Finance, George Guvamatanga, to serve on that board. There are a number of issues which are within the Revenue Act which require proper Bill to come before this august House. There are a number of issues that we feel that the Revenue Act now needs to be re-looked into. There are several things that need to be amended.
In my view, it is amiss for the Minister to do a piecemeal amendment of the Revenue Authority Act through the back door of this Finance Bill – it will be wrong. in any event, there is no urgency to try to fast track this through here because I believe that let us just do the right thing; let the Hon. Minister come up with the various amendments that are needed.
We have had discussion through your Committee Hon. Chair, the Portfolio Committee on Budget and Finance with senior officials from his ministry. They are aware, the issues that are there that we have raised under the Revenue Authority Act. So we ask you Hon. Minister that for the sake of good order, that this Clause 33 be expunged from the Bill. I thank you.
HON. RAIDZA: Thank you Hon. Chair. My proposal is on the number that the Minister is proposing that there must not be more than 10. Just for clarity, I am proposing that maybe the number must be changed to nine so that in case of voting then you can use the odd numbers. I thank you.
HON. MADZIMURE: Hon. Chair, whenever you put in place a structure, you put it for a purpose and especially now that we are trying to make each and every Government institution accountable. The Permanent Secretary of Finance, one of his roles is to ensure that ZIMRA performs well. He cannot then be a board member and then ask ZIMRA to be accountable - that will not work. It is impossible. What we are simply trying to do is to help siphon money out of ZIMRA because he is the same person to whom this board will submit even their requests whenever they want to change even sitting allowances. How independent will he be in dealing with the ZIMRA matters? It does not work.
Any person who has done principles of god management will not accept such an arrangement in an organisation. This section should not be part of the Bill. You cannot have the Permanent Secretary of Agriculture sitting on the GMB Board. How does he carry out his oversight responsibilities? Probably the Minister had an oversight but the worst thing is, even if he is to go and consult the Public Service Commission Chairperson or the Commissioner, he will not recommend that or advise the Minister to go to that route because you defeat the whole principles of good governance. Boards cannot be run that way that you are the Permanent Secretary to whom the board is expected to report and you are a board member. It is unacceptable. I think this particular clause should just be removed.
HON. NDUNA: I just have a contribution in that we should use whatever debate we have to correct some anomalies. It has been said time without number here in Parliament that in the appointment of boards, it might be critical for those board members to come through Parliament in their appointment. This is because all the time a new Minister gets into a portfolio; you get new board members coming on board. Is it because the previous board members are - it is called three issues; either naive, arrogant or involved in some corruption tendencies or is it because there is a collusion, corruption and nepotism by the incoming Minister?
It is my thinking and I propose that in future, let board members be appointed through Parliament. It is going to save us a lot of technocrats’ flight because it cannot be right that a Minister gets into a Ministry and appoints board members and removes those old ones. So, I have no challenges with you appointing but as a take home in the future, it is my thinking that let us have them being appointed like Commissioners through Parliament.
HON. MPARIWA: I want to join my colleagues in persuading the Minister to withdraw this particular clause. It serves no purpose but actually spoils the whole meal. No teacher sets an examination, sits for it and then also marks the examination. That is total corruption. In terms of transparency and accountability, we need to be careful on what we approve as Parliament because tomorrow tichazochema.
I wanted to find out from the Minister the urgency of slotting in this clause into the whole Finance Bill. If there is no urgency, I would ask the Minister to withdraw it and actually do another proposal, a total Bill completely out of this particular Finance Bill so that it gives us leeway to move but this particular clause does not serve any purpose. It has actually spoiled everything.
To those colleagues who have been listening to the Public Accounts Committee, we have time and again bemoaned the lack of transparency and accountability when it comes to boards. This particular board where a Permanent Secretary sits in it has no relevance whatsoever. If it is happening then it is pathetic and we need to correct it by actually withdrawing this clause. This is the time to actually amend and make sure we put the right laws in place. Thank you.
HON. TOGAREPI: Hon. Chair, I am not sure if I am reading something different because if you look at that section, there is nowhere where it talks about the Permanent Secretary of Finance. Are we inventing a section or what? The issue of increasing numbers to 10, of course for corporate governance issues; it may give us problems if it is an even number. I think let us come up with an odd number. Again, still as we look for that odd number, the section says not more than ten, which means we can still have five or seven. I think that leeway also brings in expertise that we may need to run ZIMRA. In my view, we are just debating something that is very clear and simple. I think let us allow it to pass.
HON. BITI: Hon. Chair, in his Second Reading speech, the Minister justified the increase in board members from 8 – 10 on the basis that there is work at ZIMRA but board members are not executive members. Boards are traditionally run on committees and that is why the model used in the ZIMRA Act is a model that is coming from the Corporate Governance Act, which as my friend knows as a Professor of Finance, was modeled on King 3, so sound corporate governance is already incorporated in the current position. Why then does he want to increase the quantitative numbers of board members? If he had come before Parliament and explained what expertise he thinks is missing, Parliament could have listened. These board members that you want, what are they for? Is it human resources or data experts? He does not say that and in the absence of that, he just wants a blank cheque to appoint board members. How can we depart from principles of sound corporate governance? Izvi zvekuti munoda kuisa haranga dzenyu muma boards, we should say no to that. There is no sound basis. Chapter 9 of the Constitution is very clear Hon. Nduna. Chapter 9 speaks to the principles of sound corporate governance and this proposal is not consistent with the principles of sound corporate governance that are incorporated in Chapter 9 of the Constitution. As Hon. Nduna keeps stating, anything that is done inconsistent with the Constitution falls under the watchful eye of Section 2 of the Constitution. We object to the abuse of the Finance Act to make amendments to other independent stand-alone principal legislation. If he wants to deal with the Revenue Act, bring comprehensive amendments that will be subject to public consultation in terms of Section 141 of the Constitution.
There are also many more issues that are wrong or out-moded in the ZIMRA Act. This Act is old, it was done in 1989 and ZIMRA came into existence in 1990. That Act now needs to be modernised particularly on the technology component, and the fact that we have failed to properly transit to electronic digital submission of our tax affairs, that Act needs to be modernised. So, we urge the Minister to bring a comprehensive Bill amending ZIMRA including incorporating the suggestion by Hon. Nduna that it is high time that Parliament approves important board appointments. Only last week, ZIMRA appointed Regina Chinamasa as the new Chief Executive Officer. Surely, Parliament should have had a say and I am curious - is Regina Chinamasa related to my good brother Patrick Chinamasa? I hope not but those are the issues. I am talking about principles Hon. Togarepi, Parliament must approve. -[AN HON. MEMBER: Inaudible interjection] – Please protect me Hon. Speaker. Munhu haangoukura mumwe achitaura. So in short Mr. Chairman, if the Minister wants his board members, tell us why you want them and in what areas of expertise. Also, bring a comprehensive amendment to the Revenue Act because there is a lacuna in that Revenue Act. There are many gaps in that Act that Parliament can assist you. Do not sneak in major material amendments.
Finally, I have a problem with the drafting and this is not the Hon. Minister Ncube’s problem but it is the problem of the draftsmen. Any Minister acts on the directive of the President. If you look at Section 110, Chapter 5 of the Constitution, Executive power resides in the President who then acts through a Cabinet. So, a provision that says ‘not more than 10 members, subject to subsection 3 by the Minister after consultation with the President and in accordance with such directions as the President may give’ is superfluous because you are already subjective to directives by the President. It is just bad drafting. So, I urge the drafters to drop that. It is not the Minister’s problem but just an elegantly drafted provision, and unnecessary provision because a Minister acts on the directive of the President, so why repeat it? It is a Finance Act that has been incorrectly drafted.
(v)HON. NYATHI: I wish to add my voice to the amendment of this clause. Firstly, I want to concur with Hon. Raidza that if the Minister wants to add board members, I ask that he deals with odd numbers 5,7,9,11 and so forth. Should we increase the number or not? Secondly, I also realised that it is important for us to comment on the issue why certain Ministry officials sit on the boards. From my experience, I think this is a clause that should come independently on its own for the reason that I also noted that in most of our parastatals, those who sit in that particular board is for institutional memory or to give some kind of guidance. It has been traditionally like that. So, if Hon. Members think that there must be an amendment, let us agree if there is a need for us right now to add more members on the Revenue Authority Board. I think that is the issue that is on the cards now that we need to discuss. So, I submit Hon. Chairperson.
HON. NDUNA: Thank you Chairperson. I just want to say that it was anticipated that the ports authority might ask the Minister to have a broad based board so the increase of the numbers might have been anticipated. Now that he has expunged the issue of the Ports Authority, he might see reason to either retain the number and maintain what he has. So I thought I should come up here and make the Hon. Minister see what he contemplated. Now that he has expunged that Clause, maybe he may see reason not to increase the number. I thank you.
THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. PROF. M. NCUBE): Hon. Chairman, I thank the Hon. Members for their contributions, I really thank them. I have taken note of contributions from Hon. Mushoriwa, Hon. Raidza, Hon. Madzimure, Hon. Nduna, Hon. Togarepi, Hon. Mpariwa, Hon. Biti, Hon. Nyathi and Hon. Nduna who had a double take, which is good. I hope that I did not omit anybody so that the record shows that they debated and contributed to this clause.
I want to deal with a matter pertaining to the Permanent Secretary sitting on the Board of ZIMRA. The Revenue Authority Act (REA) in Section 5 provides for the Permanent Secretary to sit on the board. So he currently sits on the board as one of the eight board members on the ZIMRA Board and that is legally in order – I want to be clear. I now want to turn to the Corporate Governance Act. The Corporate Governance Act, Section 43 (1) deals with exemptions. It states that entities are allowed to seek exemption from the provisions of the Public Entities Act.
So what I did, even I was not fully comfortable with the Permanent Secretary sitting on the ZIMRA Board, even though the Act says so because I was cognisant of what is happening with the Corporate Governance Act. So I sought permission and sought an exemption in writing, and the exemption was granted in writing that indeed he can sit on the ZIMRA Board. So we are covered by law on one end and by exemption on another - so that is in order. – [HON. MEMBERS: Inaudible interjections.] – The law already provides for that, Section 5 of the Revenue Act already provides for that.
I want to then turn to the issue of why I am proposing that the board size be increased. Hon. Members, you know, ZIMRA is probably the largest institution, and I am using it loosely, in the country. It is collecting over a trillion ZWL which we are using to finance our expenditure as Government and public sector. It is a large institution and it is also a complex institution. It needs all the skills that are needed for it to perform its duties. I have done a lot of work on corporate governance in my previous profession; in fact, I am an authority on the impact of corporate governance on company or corporate performance.
I am happy to share the work actually. I did a lot of work in the United Kingdom, the United States of America and South Africa. What we found in that research is that board size matters, board composition matters. In fact, there is an optimal board size and on this work, I worked with Mervyn King who used to come and support my deliveries for the MBA classes on this subject. So what we found was that the aptitude of the optimal board size Hon. Chairman for a corporate to be effective is 12. The composition of the board also matters. We found out that boards that have more women or a sizeable number of women on the board, those companies perform better, so gender matters.
What also matters is age but with age, you have to be careful. It does not mean that you must have a lot of young people or a lot of old people. You need again a mix of the older gray hairs, if I can use that, but also some young people as well. So board composition matters but finally on board, just the mere size. Board size allows you to then take care of a fourth factor which is the skill mix because boards work effectively when you have got the various skills that are needed, that is, law, accounting, economics, engineering and so forth. Even in banking you need engineers to deal with loans on the infrastructure sector, you will be amazed. So you need a spread of skills. Board size allows you to have those skills on that board so that you create the right board committees; you have the right contributions in terms of debates when things come up at board level. This is necessary.
All I have asked for is an extra two board seats that is all but there is something that I am persuaded on that was raised by Hon. Raidza. Who spoke about a board size of nine and I am persuaded by that. Perhaps we need an odd number, so we can either go to nine or go to 11 and 11 is still below the optimal board size of 12. – [HON. MEMBERS: Inaudible interjections] – I have also understood the sentiments around the House. So I also agree that we amend this clause to say the board should increase from eight to nine. I thank you. Later then I can always bring the separate Revenue Authority Act Hon. Chairman, for full consideration by this House because the Act is old. It needs to be amended in various areas, we could then consider this again but for now, I request that the board size be moved to nine. The odd number, I think, is a very good idea so that we deal with potential stalemates. I thank you Hon. Chairman.
HON. MUSHORIWA: Hon. Chairman, I think that the Hon. Minister is missing something. The ZIMRA Act like what Hon. Biti said, came into effect in 1989. This House then passed the Public Entities Corporate Governance Act and this Act that then passed in this august House reads in this format, I just want to quote to the Hon. Minister first it says, ‘The provisions are there that no Permanent Secretary of a line or other ministry shall be appointed or hold office as a member of such board…’, - [HON. BITI: Which section?] – It is under Section 11, Appointment of Boards of Public Entities subsection 5(2), not only that Hon. Chairman. This Act then says that, “any other Act which is contrary to the provision of this Act will be void to that extent of the inconsistencies with this Act. The Public Entities Corporate Governance is a much later Act which was passed by this august House well after we had passed the ZIMRA Act. If the Hon. Minister wants us to even consider – I want to put it on record – I would not want these piecemeal amendments but if he wants to do that, the Public Entities Corporate Governance should take precedence and the Public Entities Corporate Governance stipulates, he was talking of exemption, there are no exemptions. You just wonder where did the exemption on ZIMRA, that he mentioned, was submitted to and who authorised it. The truth of the matter Chair is, it is not allowed and we should not allow this august House to pass it. We passed the Corporate Governance Act and we cannot be seen as if we forgot what we did as a House. We knew what we wanted to fix. We wanted to fix a situation where a permanent secretary who is supposed to get the reports from the board finds himself also being a member of the board. The Hon. Minister should have come here to simply say, I now want to amend the ZIMRA Act so that it confines to the dictates of the Public Entities Corporate Governance. If he had said that, we could possibly be persuaded to accept it because it then removes the permanent secretary and then – [HON. MEMBERS: Inaudible interjections.] – No, it is there because he has already brought it. The problem with you Hon. Togarepi is, you just fold your hands, you do not read what is contained in the Finance Act. Chair, you should protect us from...
*HON. RAIDZA: On a point of order Mr. Chairman. I need guidance, maybe I am getting lost somewhere. On Clause 33, there is nowhere Guvamatanga is mentioned. There is nowhere it is mentioned about amending the ZIMRA Act, even amendment of the Corporate Governance Act. Maybe Hon. Mushoriwa should show us on his copy where Guvamatanga’s name is written so that we move together.
HON. MUSHORIWA: Mr. Chairman, let me read for Hon. Raidza. He is a professional and should do better. The amendment says, ‘with effect from 30 March 2022, the board of the Revenue Authority Act is amended’. This is what we are debating. So if the Hon. Member has not read, he should not try to disturb the smooth flow. The Hon. Minister is aware that the very amendment that he seeks to do under the Revenue Authority Act pertaining to the board of directors already contravenes the Public Corporate Governance Act. Naturally, if the Hon. Minister wants to amend this Act, he should also make sure that whatever he is doing should be streamlined to make sure that the ZIMRA Board is in tandem with the latest position taken by this august House.
*HON. MADZIMURE: Thank you Chair. The Minister is misleading the House. He is talking of exemption that is not provided for in the Public Entities Act. It is not there. According to his own admission, he said he wrote asking for an exemption and he was given authority to do so, which authority is wrong. Apart from that, he had not even explained why he would want to force the permanent secretary to sit on the ZIMRA Board. Why? What is that the permanent secretary is going to provide which is not there as far as the board members are concerned? When talking of even the skills that he is referring to amongst the board members, it is the Minister’s responsibility to identify those skills. If you are not going to look at the skills, instead you look at the individuals, kumutarisa achifamba soo kuti uyu anoita uyu. Then whenever you want to constitute committees of that particular board, you will still run short of individuals to meet your expectations. It is your responsibility even if you appoint five people, if you are careful Minister, five people you can get all you want. Mind you, these are not executive members. People who run ZIMRA on a day to day basis, it is their experience in their various responsibilities that they bring to ZIMRA to make the final decisions.
Mr. Chairman, whenever you are communicating with the Ministry, if you are a board, you go through the permanent secretary who then advises the Minister. In this case, how are you going to do it? Mr. Chairman, this might appear to be innocent, we are not accusing anyone of being corrupt but this is precisely how we have destroyed systems here in Zimbabwe. For the benefit of individuals, Mr. Chairman, those who have worked at reasonably high level will understand when I say systems are destroyed...
THE TEMPORARY CHAIRPERSON: Order Hon. Member. I think we are on the repeal of paragraph C and it only deals with numbers, we need to concentrate on that.
HON. MADZIMURE: Chairman, I think we are all Members of Parliament and we must all be conversant with issues that we will be dealing with. The Minister has already responded to the issue that we are now arguing. He has already responded to that issue and you are trying to tell me the Minister was offside when he responded. He knows what he is talking about. This is precisely what I am following up on.
THE TEMPORARY CHAIRPERSON: Hon. Member, as Chairman, I am interested on Section C. If you bring things outside that then there is a problem.
HON. MADZIMURE: Chairman, have you read the particular section of the ZIMRA Act which is referred to here? If you have not read it then you cannot tell me that I am offside when I am referring to that you have not read.
THE TEMPORARY CHAIRPERSON: Hon. Member, I did not say that you are offside. I am saying concentrate on Section C.
HON. MUSHORIWA: That is exactly what I am concentrating on and that is why I have reminded you that the Minister has already brought the names.
THE TEMPORARY CHAIRPERSON: The names are not there Hon. Member. This is why I am saying you are off topic.
HON. MUSHORIWA: It is in the principal Act – [HON. MEMBERS: Inaudible interjections.] – Because you do not understand issues. How can we make you understand? You are too grown up Hon. Togarepi that I cannot teach you anything.
HON. GONESE: Thank you very much Mr. Chairman. I have been following the debate and I would like to address my sentiments to the Hon. Minister. When you were referring to an exemption, you were cognisant, in my view, of the provisions of the Public Entities Corporate Governance Act, No. 4 of 2018. That is the one I am looking at now. Obviously, for there to be a request for an exemption, it means that you were looking at the provisions of this particular Act. I want to direct your attention to the specific section which actually provides that no Permanent Secretary and I want to reiterate what my colleagues who have spoken before me have said. The provisions are peremptory. No Permanent Secretary of a line or other Ministry shall be appointed to a wait office. So, if that Act which came after the enactment of the ZIMRA Act takes precedence and the Act in question is actually very clear that if there is any - Hon. Mushoriwa has already read the section. I will not bore the House by repeating.
The point is that the Act itself, when it was promulgated, it was anticipated and understood that there might be some other Acts which were passed by this august House previously, where there would be inconsistencies. That is the reason why in its wisdom, the Legislature, this august House then proceeded to make that provision that this Act will then take precedence. In the context of that, I believe that the Hon. Minister should do the honourable thing and consult his Ministry officials so that they look at that Bill and then bring in an amendment to the ZIMRA Act in terms of which the Permanent Secretary cannot continue, cannot sit on that board because it is contrary to the provisions of the law. No one has the authority to override an Act of Parliament. It is only this Parliament which can repeal the Corporate Governance Act. As long as it is still law, as long as its provisions are applicable, no one has got that power to grant any exemption. So that purported exemption because it has no validity at law, it is a purported exemption because it is invalid in so far as it cannot override an Act of Parliament - [HON. TOGAREPI: Inaudible interjection.] – I do not know whether Hon. Togarepi is comprehending what I am articulating. – [HON. TOGAREPI: What?] – You just need to apply your mind; you will then understand - [HON. MEMBERS: Inaudible interjections.] –
What I am saying is, this Act passed an Act of Parliament in 2018. The ZIMRA Act was passed in 1989 and it was in anticipation of …
HON. DR. MURIRE: On a point of order. My point of order is that we cannot have a direct exchange of two Members. Members should speak to you. There was now a direct exchange between Hon. Gonese and the Chief Whip.
HON. GONESE: Hon. Chair, I am addressing myself to the Hon. Chair. So, what is critical is that as the Chair, you must also be appreciative of what point we are articulating. That is the reason why it is the Hon. Minister who will then respond. I think I just wanted to direct the Hon. Minister’s attention to the provisions of the law in that the provisions of the law take precedence over any other purported Acts which are invalid as long as they contravene provisions of an Act of Parliament. Until such time, this Act which we are referring to has been amended or repealed, its provisions will actually prevail over the previous one.
HON. MASENDA: On a point of order. May I urge Hon. Members that they should not belabour points that have already been exhausted by other Members in order for us to make progress. I thank you.
HON. PROF. M. NCUBE: Thank you. I would like to thank Hon. Masenda for that point of order. I would like to thank Hon. Gonese, Hon. Madzimure and Hon. Mushoriwa for their contributions. This clause is very clear Hon. Chair. It is seeking for approval or making a proposal to increase the board size. That is all. In the proposal, I proposed to increase board size from 8 to 10 and I have modified to deal with the issue of the odd number, which I think is a good observation. I propose that the board be increased from 8 to 9. I thank you.
Amendments to Clause 33, put and agreed to.
Clause 33, as amended, put and agreed to.
Clauses 34 and 35 put and agreed to.
On Clause 36:
HON. GONESE: Thank you Hon. Chair. I just want to debate this particular clause. My proposal is very simple. There is reference to the age of 70 years. I am proposing that that should be removed, the reason being that once an Hon. Member has served and is entitled to a pension, I believe that the issue of 70 years should not arise. Once that principle is understood, as Hon. Members would be aware, we are dealing with a situation where a lot of Hon. Members are passing on and so on and if we look at the life expectancy in Zimbabwe at present. So, I believe that once a person is entitled to a pension, it should not be confined to those who have attained the age of 70 years. I believe that this is the position which will find favour from all Members across the political divide. I thank you.
HON. NDUNA: Thank you Hon. Chair. I have come to know that whatever you said somebody has said it before. When you make reference and say something that has already been said, you have to pay homage that goes to the person who would have said that. Hon. Chair, the issue of age 70 may be trying to play void. Psalms 90:10 says a man is appointed three score and 10. A score is 20, three scores, sixty and 10, so it is 70 years. When you see yourself going above 70 years, you are living a bonus and it is my clarion call and hope that the Minister should not go into the environs of life and maybe come down or even expunge that urge because for someone to attain the age of 70, even the Bible recognises that this is a cut-off point and anything above that -there is I think it is number five commandment where if you honour your father and mother, you will be honoured with long life on this earth. So it is my thinking that we expunge that.
However, also issue of pension, I want to go to the Hon. Minister and say just one term of five years should allow members to be pensionable because of this one reason. I will go to Poland first. Poland had 1.3 million people who perished during the Second World War and they are seeking reparations from Germany now as we speak. In Zimbabwe, 1 130 whites of colonial origin perished and they have pensions now in London which somehow are taking care of their origins from Zimbabwe. There are more than 10 000 war collaborators, restrictees, detainees and fighters that perished and 10 000 residents that perished. So all in all, we had over 20 000 perish because of the war of liberation but you will find that the pension and the payouts are not as robust, resilient, vociferous, efficient and effective as those of those that we fought against.
It is time that we own our own and the formerly marginalised black majority who form part of a big part, except for Hon. Markham and that other lady, of this august House. It is unfortunate that we still are in these surroundings with a colonial past. You can see that this takes its roots from the Londoners and the erstwhile colonisers. The only benefit we can get now as Parliamentarians, please give us pension after five years. If you want and you say it in your heart, you can apply it retrospectively.
Hon. Members out there who were in Seventh and Eight Parliament, some of them, especially the Eighth Parliament getting into the Ninth Parliament, 64% remained in the Eight Parliament. So it is my thinking Hon. Chair, if the Hon. Minister can see it in his heart to take care of Members of Parliament in that regard and also I have given the reason why I think compensation is very key and we also need to complement your purse by getting Boris Johnson and the erstwhile colonisers to compensate us. They came through with the Pioneer Column with nothing except a bag and they massacred our own en masse in Chimoio and Freedom Camp in Zambia. It is time that they pay reparations to Zimbabwe. I have given an example of Poland seeking trillions of dollars from Germany. So that is a benchmark Hon. Minister Sir. Thank you and I am quite sure the people of Chegutu West Constituency are proud of me that I have put across the issues as espoused.
HON. DR. MURIRE: Thank you Chairman. I am rising also to make my comment on that clause. That clause seems to be penalising somebody who chooses to serve the nation as a Member of Parliament. Why I say so, most of our State services pensions regulations fix the retirement age at 60 and also if one chooses to go on early retirement at 50. Now because one chooses to become an MP, he is actually being denied to retire because not many of us reach the age of 70.
So it is either that provision is set to comply with other State serves pensions regulations so that the age boundaries should be 60 – [HON. MEMBERS: Inaudible interjections.] - It is my opinion. You will stand up and say yours.
I am talking about what is provided for in the State services pensions regulations and early retirement is 50. So because the engagement of a Member of Parliament is five years, it therefore follows that there is reason to reduce it further down to 50 years if ever we have to talk about age, but my proposal is that the age issue should not come into question. What should come to question is the service that the Member of Parliament serves and putting it to one term actually makes the old people like ourselves struggling to seek for a second term and yet after five years, a person like myself, it is not that I would want to seek a second term. I would be content with one term but because I do not have pension, I have to struggle with my children who are coming to become an MP as well. More importantly, my contribution after five years and being 60 as I am now will not be meaningful because I cannot make noise that happens here in Parliament all the days. So I propose that after one term, a person should be given pension and go and rest.
Secondly, we should seek reference to those who also serve the State. Vice Presidents go for one term and they get a pension. So what is wrong with Members of Parliament who are serving the State? They should also be given one term. That is my proposal. Thank you Chairman.
+HON. L. SIBANDA: Thank you Mr. Chairman for affording me this opportunity. I just want to add a few words to support what was said by other Hon. Members that Members of Parliament should get pension.
It should not matter Mr. Chairman for how many months I have been in Parliament. If I have been in Parliament for 10 months, then they should calculate that as a term. They should not calculate it as 10 months. A Member of Parliament comes to Parliament for five years, but when they leave Parliament, those people suffer because there are a lot of things that they have to take care of.
HON. MOKONE: Thank you very much Mr. Chairman. I would like to support the other Hon. Members who have said that the age of 70 must be scrapped off. I am a good example here and I have been thinking how I will reach that age of 70 and whether I will be alive at 70. So I would like to support the idea that we do away with the age of 70 and even the age of 50 is not good because some of us have not yet reached 40 something years. I support that the age of 70 should be scrapped. Thank you.
HON. DR. MUTODI: Thank you Chair for allowing me to add my voice to the issue of pension for Members of Parliament. I think we deliberated again and again in the past sessions the fact that a Member of Parliament has been elected and serves for a certain period of time serving the nation as a Member of Parliament that requires recognition by the nation. Pension for a Member of Parliament, for it to come after two terms, I think it will attract unnecessary contestation and bickering for positions like what the other Hon. Member said that at the age of 60 he wants to retire.
You find that the work that a Member of Parliament does over a period of one or two years and up to the end of five years, it is a lot of work that adds to the development of the country. The number of laws that the Member of Parliament would have contributed in the law making process is enormous and that work needs to be rewarded. I would like to urge the Minister to just accept what the Hon. Members are saying. He is also a Member of Parliament and he needs to agree with us that one term is enough for a Member of Parliament to be pensioned and to be paid all the benefits that befits a Member of Parliament. I thank you.
+HON. S. SITHOLE: Thank you Hon. Chair. I just want to add my voice. I would like to buttress what was said by all the Hon. Members on the issue of pension. I would like to say that pension should be given after five years but if an Hon. Member passes away after a year or two years, that person should be pensioned because he would have died and it will be God’s will. If he dies, his children will suffer but if a person is recalled by his political party, then he should not get the pension but if he dies by God’s will, then he should get the pension. I rest my case.
HON. PROF M. NCUBE: This clause is simple. It was not requesting for one term or two terms. It was just trying to assist Hon. Members with something else. What is else; the else is a situation where a Member has actually been contributing to the pension and they have been so successful in winning elections. They have won their first term up to maybe the fourth or fifth term but they continue contributing without being able to benefit from the pension. So we were saying that if you hit the age of 70, even if you are a serving member uchingosevenza oramba uchingohwinha, be able to draw down on your pension. That is all.
We can argue about the age of 70 to say let us reduce it. My proposal is like this, we can do two things. We can just park this clause and I go back and consult on the one term, two terms but I cannot argue for one term here. I have not deliberated over that financially and I need to consult. We can park it and then we consult Public Service Commission and as Hon. Members, we can debate this in our budget retreat, add power to that and agree on a position at that three day budget retreat, then come back here, I insert a clause and we will all agree and pass it.
That is what I propose and I would rather we park it and then come back to it in November because I cannot agree to a one term proposal without full consideration. All I was trying to do was to assist you with one simple issue of the 70 years but on the 70 years, I also want to propose that let us drop it to 65 if that helps. –[HON. MEMBERS: Inaudible interjections]- If 65 years will not do then I propose we park this clause and we come back in November and we agree in full whether we are looking at 50 years or one term and then we can debate it further and properly. So let us park it Mr. Chairman. Thank you.
Clause 36 put and deleted.
Clause 36 put and deleted.
Hon Members from both sides of the House having consulted with the Minister of Finance and Economic Development.
THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. PROF. M. NCUBE): If I could take the floor with your permission Chair and just add something else to give comfort to Hon. Members. Hon. Members have been making their contributions while we were talking in this corner, which is also good. They were also giving me more ideas about what happens in the case of death, and so forth. It gets very complicated. What I would then suggest is that we create a committee that is linked to the Welfare Committee which is under the CSRO to deal with this issue and interact with us in Government as we consult so that we get to a common position by early November when we retreat and then we come back with a proposal that we all agree with and pass. That is what I would suggest.
Clause 36, put and deleted
On Clause 37:
Clauses 37 and 38 put and deleted.
On Clause 39:
HON. MUSHORIWA: We just seek clarification from the Hon. Minister. What is the mischief that the Hon. Minister is trying to sort out under this amendment on Clause 39? Why do you have the definition of petroleum products, what is the reason? The other option is actually to expunge it from the Bill.
HON. PROF. M. NCUBE: Clause 39 is quite straightforward, basically in the Income Tax Act, the definition of petroleum products was missing. All we have done is to add it that is all.
We found that there is a gap in the Petroleum Act, there is no full definition of Petroleum products but these petroleum products are fully defined in the Income Tax Act. So, we are just making sure that there is congruency between the two and that is what then will be included. I am requesting that it be included in the Petroleum Act because they are currently missing. I thank you.
Clause 39, put and agreed to
On Clause 40:
HON. MUSHORIWA: On a point of order! Let us deal with Clause 3 which we parked yesterday because it may have some other areas that are affected by the concessions by the Hon. Minster under Clause 40.
THE TEMPORARY CHAIRPERSON: Let us finish the schedule then we come back to Clause 3.
On Clause 40;
THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. PROF. M. NCUBE): On that Schedule which is Clause 40, I would like members to turn to the item pertaining to tax exemption. We moved that from 2 500 if you recall to 4 000, that is on page 23, line 35 if we have the same pages. That is the amendment so that it is consistent with what we agreed to yesterday. I thank you.
Amendment to Clause 40 put and agreed to.
Clause 40, as amended, put and agreed.
On Clause 3:
THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. PROF. M. NCUBE): I move that we revert to Clause 3. What was remaining was that Hon. Members wanted to know what that table will then look like in terms of the bands and the applicable income tax rate. I will share that soon Hon. Chair, what was requested after we agreed on the minimum amount in terms of tax threshold of $900 000. I give the specified rates as follows per band and we have six bands;
- 0 – 375 000 tax rate is 0 %
- 375 001 – 715 000 tax rate is 20%
- 715 001 – 1 300 000 tax rate is 25%
- 1 300 001 – 2 400 000 tax rate is 30%
- 2 400 001 – 5 000 000 tax rate is 35%
- 5 000 001 and more tax rate is 40%
These figures pertain to the last five months of the year. So this
375 000 actually translates to the 75 000 a month times the number of months remaining to December. That is how it is actually captured because we have only got five months in the year. Remember these are annual figures and they reflect the cumulative for the remaining time of the year which is five months. I thank you.
HON. MUSHORIWA: Hon. Minister, I think the officials have actually shortchanged us. There is something amiss. If you check from the rate of 35%, they have actually retained the figures as they were in the book and also on 40%. If we had actually moved like we agreed yesterday then we could actually have expected that the changes could also go to the other brackets but for you to then retain them as they are, I think that is not fair. I think they need to be pushed up as you have done.
HON. BITI: Also Mr. Chairman, it does not matter that there are five months to the year end. The increase in the tax free threshold made by the Minister yesterday of ZWL900 000 should be reflected in the first band. The only thing that will happen because it is very clear that you are saying with effect from the 1st August, what it means is that the accountant or auditor will then say from 1st January to 31st July, it is
0– 250 000 and then from 1st August to 31st December it is now the 700 000. The band should have what we agreed yesterday and that is the formula. So what the officials are telling you is not correct. Then there is a multiplier on all the other bands. They cannot remain static but your bands are remaining static, meaning that the officials have not taken into account the fact that the point of entry is now ZWL900 000. Do not be worried about the four months. The operative date is 1st August, so what you have done there is to give a nightmare to accountants in the businesses.
I am basically saying the rates must change to acknowledge what we agreed yesterday, namely that there is a tax free threshold of ZWL900 000. So, the tax free threshold band 1 must be 0 to 900 000. Then the second band is from 900 000. The Minister said they are calculating for the remaining five months and that is irrelevant because the person calculating knows that from 1st January to 31st July, they will use the non-concessionary of 300 000 which we changed. From the 1st of August, 900 000 is now the concessionary. So these bands must change. It is the drafters’ error.
HON. GONESE: Thank you very much Mr. Chairman. I want to buttress the point which has been ably articulated by Hon. Biti. I just wanted to illustrate that you had several bands under Clause 3 and once you increase the bottom figure which was starting at 375 000, it has now been adjusted and it translates to 75 000 dollars per month. This means that any person who earns 75 000 and below is exempt from tax. However, it then follows that all the others who were supposed to be taxed at the various levels which are clear – these officials have short changed the people of Zimbabwe.
HON. MUSHORIWA: Thank you so much Hon. Chairman. I listened to the Hon. Minister’s response and the Hon. Minister in his response tried to justify the removal of tax on unbeneficieted minerals because he was saying that we were going to the question of these miners paying their royalties. When we then moved to the section, we then realised that we are removing tax on the minerals because they will be compensated by the royalties. I think we are shortchanging the fiscus.
Hon. Chairman, I am saying so because the Hon. Minister, in his response, when we were arguing why miners should pay their royalties half in ZWL and half in forex; it then brought us to the position that we were arguing under Clause 18 to simply say that the benefits of removing this unbeneficiated platinum is outweighed. We are getting nothing from the royalties, half USD and half ZWL. So our position is to say let us just retain the tax on unprocessed minerals.
Hon. Chairman, when I came in, to just illustrate to you the challenges that we face. Close to my constituency, they do brick molding, all the bricks that we see, that is the Beta and the Chinese have invaded on all these bricks. Do you know what they are doing? In addition to brick molding, they are actually mining and getting gold and Government knows about the minerals that are being mined in that area. All those minerals are just being exported and nothing is coming to the fiscus. We are saying that it is wrong for the Hon. Minister to remove this taxation.
In any event, in 2019, we agreed with the Hon. Minister when he moved to remove it under the promise - [HON. BITI: It was in 2018.] – 2018 yes, in his maiden Budget. He said that in 2021, these miners have made an undertaking that platinum would now be processed in Zimbabwe. We are now in 2022 and nothing is happening. I can tell you that by the time we end this Parliament, next year, the miners will be paying nothing. We cannot allow that to continue Mr. Chairman that was my submission.
HON. BITI: Mr. Chairman, the Hon. Minister in his maiden Budget delivered on 27th November, 2018 actually gave the same concessions to these Houses and they have nothing and will do nothing because they are not interested. So what we propose Hon. Chairman is that the tax must remain there, if anything, there must be a punitive tax to encourage them to do and to construct the refinery. The Hon. Minister also, if you suspend and they do not construct. You must also ask them to refund, if we have to maintain this and to refund, there must be penalties.
I just want to talk about tax exemptions. There is an organisation Mr. Chairman, called the Just Tax Network. It is based in Nairobi, Kenya. It is full of brilliant economists and so forth and they have done studies that these tax exemptions, tax holidays given to these mining houses are costing Africa USD3 billion annually. If you look at Zimbabwe, the tax concessions we have given to GDI – I refer to the Statutory Instrument that the Hon. Minister gazetted in the Government Gazette in March of last year. The concessions we have given virtually to everyone, are we getting a corresponding return? I submit Mr. Chairman.
When you look at the state of under development around mining communities and when you look at the fact that 100 years after colonialism, there is no value addition of our minerals, tax breaks, special initial allowances are costing Africa. The lesson that we should learn from 100 years of being exploited by these multi-national corporations is that they are just here to extract vari kungouya kuzoti mora, vachimora, vachimora; isu maZimbabweans tichitambura. So this tax break does not benefit anyone. In my Second Reading, I said that iyo ZIMPLATS iyoyi ine 176 million ounces of platinum, chabuda kuZIMPLATS hakuna. If we were selling these platinum concessions that we are giving, we will be driving our economy. So let us wake up for a change, takafunda saka tinofanira kuita better than vana sekuru vedu vakatorerwa zviminda mugore ra1890. Vana sekuru vedu vanototi tsamwira kuti muchiri kutengesa nyika, isu takapihwa shuga tikakabira. Isu toramba tichingo kabira nhasi? Hazviite Mr. Chairman, let us say no to this tax.
HON. C. MOYO: Hon. Chairman, it is my humble submission that the Hon. Minister seeks to increase the royalties by 5%, especially for those companies that are engaged in the exploitation of platinum. I think the percentage is too small. It has to be increased maybe to 7% or 10%. I am saying so because when we talk of underdevelopment, our resources are being taken by those engaged in foreign direct engagement in foreign direct investment. They must be encouraged to come and do smelting here and we have the finer products that we can attach value on the finished products. Instead of giving them 5%, which is too little, let us raise it to 10%. In line with the NDS1, it is one of the pillars of NDS1 to do beneficiation and value addition. It is my prayer to the Hon. Minister to raise the percentage as a way of collecting revenue. Can you imagine, at Zimplats no one is paid in RTGS, even the unskilled staff. That is a reflection that they are very rich. They can afford 10% and we increase our revenue. Thank you.
HON. NDUNA: Thank you Mr. Chairman. As always, I am going to say this issue we call minerals is a finite resource. The more we procrastinate, the longer we will become destitute. These minerals are the only things which we have. The operators and mining houses are going to leave gaping holes before we come up with robust and resilient policies in order that we benefit and value add our God-given natural resources. It is finite in this way Hon. Minister, in my constituency there is this animal called Pickstone Peerless Mine. They started on open cast and now they are doing deep shaft so that they can have tunnels as far as I can see. My clarion call is, let us have our royalties now. Not only that, let us peg them at 10 or 15%. If you do not do that, you cannot apply the law in retrospect because there will be nothing to apply the law to. If the reason for the law has gone, there is no more need to have that law. You strike it off. This is a finite resource and it is going and it is gone.
We started talking about beneficiation and value edition. If you remember an Hon. Member called Hon. Chidakwa at the time, he was Minister of Mines, he is no longer there and Zimplats were procrastinating and giving him all funny stories. I told him, standing here that Minister, these people are going to hoodwink you. Today, they have collapsed mine shaft Bima and it is now back on track but they are still removing PGMs to Armplats in South Africa. Nothing has benefited Zimbabwe. Further to that Mr. Chairman, I would make a suggestion to the Hon. Minister that the shares of some of these mining houses are premised on the value of our mineral resources, which mineral resources, some of them are not being extracted ahead for speculative purposes. This is why Government has taken over 26 thousand hectares of platinum redeem claims and given to Carroll Resources. It is because the shares of these mining houses in Australia, London, South Africa and America – the values which are premised on our God-given natural resources that I heard for speculative purposes, our artisanal miners are getting arrested, sometimes without option of a fine, they are incarcerated because they have dared to extract minerals from claims held for speculative purposes.
Go further Hon. Minister, explore those claims held for speculative purposes and get royalties. Just do rough calculation as to what is it that you will gain assuming they were being extracted so that it outlaws speculative behaviour, especially from the mining houses. These are the same people that are calling on recolonisation of our country but are holding our claims for speculative purposes. You are the gold finger and the issues to do with finance should reside with you and in terms of our minerals, your heart should be on the right side.
Hon. Minister and Mr. Chairman, I rest my case and say, let it be 10% and more. Please look aside when they cry because they are looking at finite resource. This will never sprout from the ground again after extraction. I thank you.
*HON. CHINOTIMBA: Thank you Chairman. The problem that worries us is that for a long time the Government has been having our minerals being stolen. Our minerals are being taken out of the country without any follow ups. There is no proper accounting. Do we have a Government official who observes what has been sold and how much money has been raised out of the sale of these commodities? The Government is not in a position to say that half RTGS and half USD when in fact the minerals are being sold using foreign currency. Where does the RTGS component come from when the commodity is being sold in hard currency? Minister, this country is very rich because of our natural resources. This idea of having our commodity being exported without any follow ups is very dangerous.
The Minister should know where the goods are being exported to if it were possible. We want to create jobs and we have the mantra that the nation is built by its own people. The Minister should employ people that would be at these destinations where our minerals are being sold, be it South Africa, Japan or any other place. We should have people seeing how much is being raised. There are billions of dollars that are being raised. There is no TRGS in those particular markets. There should be no way that people are paid half in RTGS and half in foreign currency. At the same time the same people are benefiting from the RBZ auctions. They are also paid in RTGS when they are not selling their commodities in RTGS. No platinum is being sold in Zimbabwe using Zimbabwean dollars. No Zimbabwean buys platinum but it is sold all over the world, either in South Africa in Rand but they use the USD. In Japan and America, they also use the USD. Then we have problems where Zimbabwe is failing to raise money when the money is out there. I propose that there should be no payment for minerals by half ZWD and half USD unless they are artisanal miners. I am saying that 5% should remain or maybe, increase it to 10% because these people have money. I thank you.
*HON. TEKESHE: Thank you Hon. Chair. I would like to add my voice to this debate. We are failing to run our mines because we inherited the system from Smith. Smith with the Lonrho used to use it as a vehicle for exporting minerals. They were siphoning minerals to their countries. We are still doing the same and we are giving mining concessions to miners that are outside the country. We are poor and we are earning meaningless salaries because we have only asked them to pay royalties. It is my suggestion that we have mines that are for the Government. Concessions that are given to foreigners are being used as a conduit to fleece the country of minerals and we simply receive a minimum of 5% royalties, which is insignificant. We have these minerals and we should use them for developing our country. Our country cannot develop through royalties. Re-examine the issue of royalties and see how best we can move away from the Smith way of doing things, using Lonrho and indigenise everything. We are having Chinese who are coming here, mining and exporting the chrome to their country and other minerals and we still remain poor. I thank you.
HON. PROF. M. NCUBE: Hon. Chair, once again, I thank the Hon. Members for their contributions. Let me recognise them, starting with Hon. Nduna, Hon. Murire, Hon. Mushoriwa, Hon. Biti and Hon. Chinotimba. Hon. Members, Clause 18 is just a proposal, just to suspend this beneficiation tax for 12 months starting from 1st January, 2022. This suspension will expire and we revert to taxing those who have not complied. So they only have five months to comply. We have given them whatever time from January to now and they are only left with five months. Then we go back to that tax. That is all we have done.
We gave this concession understanding that we will also increase the royalty. Currently, the royalty is basically 2% and I have proposed in Clause 32. Members were also debating Clause 32 without realising it. So, there is a proposal where Hon. Nduna was talking about 10 to 15%. In the spirit of compromise, I propose as follows: we maintain Clause 18 because we only have five months to go and then the beneficiation tax will come back. On Clause 32, which Members have raised, I propose that royalty for platinum and lithium be increased to 7% - [HON. MEMBERS: Hear, hear.] –
HON. BITI: Thank you Mr. Chairman. If you grant them a concession, then they do not perform. Surely you must take back the concession. So, can you insert a provision that if they do not, they refund with interest? Remember you gave them this concession in your maiden budget.
HON. PROF. M. NCUBE: I thank the Hon. Member for that contribution. We do not need to be very harsh. We are trying to improve the environment for doing business. We discovered that this was punitive and we agree to suspend it for 12 months. We have consulted with the companies and we also consulted tax experts. They also agree on this. They are only left with five months to comply. For you to say if they do not comply they have to pay with interest, no. That is too punitive Hon. Chair. Ngatifambei, tiende mberi. I heard you said compromise is to increase the lithium and the platinum in Clauses 12 and 32 because those two are linked in a way. That was a compromise so that at least Members feel we are trying to address so that we collect revenue from our minerals. I also move that we amend Clause 32, where we increase the royalty for lithium and platinum to 7%. I thank you.
Amendments to Clause 18, put and agreed to.
Clause 18, as amended, pit and agreed to.
Amendments to Clause 32 put and agreed to
Clause 32, as amended, put and agreed to.
The Hon. Chair having announced that they were reverting to Clause 3.
THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. PROF. M. NCUBE): Hon. Chair, I come back on that table on Clause 3 which Members felt was a bit confusing and I have confirmed with my staff. By the way, they are still conferring with the drafters as well and all that, but really when you read that paragraph, there is an explanation which says that these new rates will apply.
Chair, when you read that clause which refers to ‘with effect from 1st August’, it is clear. So we can, I think, amend accordingly in terms of what the Members are requesting which is just to show those tables in annual form in terms of 12 months. What I mean by that is, for band one, it should read up to ZWL900 000 at 0% then it will not cause confusion to the tax people. So the second band will read ZWL900 001 to ZWL1 716 000 with a tax rate of 20%.
The next band three is ZWL1 716 001 to ZWL3.12 million at 25% rate. The next one is ZWL3 120 001 to ZWL5 760 000 with a tax rate of 30%. Then the next band which is the fourth band is now ZWL5 760 001to ZWL12 million taxed at 35%. The last band which is ZWL12 000 001 or more taxed at 40%, I thank you.
Amendment to clause 3 put and agreed to.
Clause 3, as amended, put and agreed to.
Bill reported with amendments.
Bill referred to the Parliamentary Legal Committee.
Business of the House was suspended at Six Minutes to Eight o’clock p.m. and resumed at Twenty Minutes past Eight o’clock p.m.
ANNOUNCEMENT BY THE HON. DEPUTY SPEAKER
NON-ADVERSE REPORT RECEIVED FROM THE PARLIAMENTARY LEGAL COMMITTEE
THE HON. DEPUTY SPEAKER: I have received a non-adverse report from the Parliamentary Legal Committee on the Finance Bill [H. B. 9A, 2022].
FINANCE BILL [H. B .9, 2022]
Amendments to Clauses 2, 3, 4, 5, 21, 22, 24, 25, 30, 32, 33 and Schedule, put and agreed to.
Bill, as amended, adopted.
Third Reading: With leave, forthwith.
FINANCE BILL [H. B. 9, 2022]
THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. PROF. M. NCUBE) I move that the Bill be read the third time.
Motion put and agreed to.
Bill read the third time.
APPROPRIATION (SUPPLEMENTARY) BILL [H. B. 8, 2022]
THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. PROF. M. NCUBE): Madam Speaker, on the 28th of July, 2022, I presented to this august House the 2022 Supplementary Estimates amounting to ZWL$929.3 billion that is Vote Appropriation amount of ZWL$851.4 billion and Constitutional and Statutory Appropriations (Pensions, Interest and Intergovernmental Fiscal Transfers) total ZWL$77.8 billion.
The Vote appropriations of ZWL$851.4 billion are broken down as follows:
- Employment costs - ZWL$428 billion
- Use of Goods and Services - 8 billion
- Capital Expenditure - ZWL$162.5 billion
Madam Speaker, the purpose of this Bill is to give effect to the
Supplementary 2022 expenditures that were presented to the National Assembly.
I seek approval for a supplementary budget of ZWL$851.4 billion to cater for additional provisions and reforms mainly related to the following areas:
- Stimulation of production targeting agriculture, industry and other productive sectors;
- Food security including;
- Grain procurement to mitigate the effect of drought conditions;
- Support towards agricultural inputs.
- Welfare of civil servants and pensioners;
- Social services delivery and social protection;
- Infrastructure and utilities;
- Constitutional requirements including transfers to provincial councils and local authorities and support for governance institutions;
- Support for Government operations; and
The supplementary expenditures being proposed are however
designed in a way that they are in line with increased revenues and will be implemented without compromising fiscal discipline and upsetting set fiscal targets.
To accommodate the additional requirements, I have revised the 2022 budget of ZWL$968.3 billion, taking account the additional expenditures of ZWL$929.3 billion to bring the total budget to ZWL$1 897 billion.
I am, therefore, presenting to this august House, the Supplementary Estimates for 2022 and the accompanying Appropriation (Supplementary Bill) (2022) for consideration and approval by Hon. Members.
I move that the Bill be now read a second time.
Motion put and agreed to.
Bill read a second time.
THE HON. DEPUTY SPEAKER: In terms of Standing Order No. 125 (8) and (9), the Bill shall not be committed to the Committee of the whole House and the motion of the Third Reading shall be decided without amendment or debate.
Third Reading: With leave, forthwith.
APPROPRIATION (SUPPLEMENTARY) BILL [H. B. 8, 2022]
THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. PROF. M. NCUBE): Madam Speaker, I move that the Appropriation (Supplementary) Bill [H. B. 8, 2022] be now read the third time.
Motion put and agreed to.
Bill read the third time.
On the motion of HON. TOGAREPI seconded by HON. TEKESHE, the House adjourned at Nineteen Minutes to Nine o’clock p.m. until Tuesday, 20th September, 2022.