Retailers defy Government on prices

RETAILERS continue to ignore the Government’s directive to exempt certain basic commodities from Value Added Tax (VAT) by not reducing prices of goods, a move that is putting pressure on consumers.

In early January, the Zimbabwe Revenue Authority (ZIMRA) began implementing measures to protect value chain integrity and transparency to counter unfair competition by informal traders in terms of Finance (No. 2) Act 13 of 2023.

During the presentation of the 2024 National Budget, Minister of Finance, Economic Development and Investment Promotion, Professor Mthuli Ncube, proposed that to restore the supply chain from the manufacturer, wholesaler to retailer, only licensed and tax-compliant operators are to procure goods from manufacturers and wholesalers.

He therefore proposed that only traders registered for VAT purposes and in possession of valid tax clearance certificates be eligible to procure goods from manufacturers.

This was meant to provide a major incentive for the informal sector to regularise without the tax authorities having to spend any money on enforcement.

The measures briefly kicked in with several business entities advising customers of price increases for certain products.

That quickly raised an outcry.

Different business associations pleaded with the Government to reconsider the tax initiatives saying they will result in increased cost of doing business, which will also affect the consumers as the charges will be passed to them.

Prof Ncube then announced that the treasury had fine-tuned some of the measures introduced through the 2024 National Budget, with basic food items such as bread, milk, cooking oil, and maize meal, exempted from VAT, eliminating the fears of price increases that had gripped consumers.

Retailers can buy from manufacturers, provided they are tax-compliant and manufacturers can sell to informal traders.

It was expected that businesses would also reciprocate the Government’s gesture by reducing prices of goods to December levels.

However, a survey by the Business Chronicle yesterday revealed that some retail outlets have not reduced prices.

For instance, a 10kg roller meal is selling as much as US$9,20 up from about US$5, 2 litres of cooking oil is now sold for between US$4,50 and US$4,99 from around US$3,30 in December.

Other products that have shown an increase in prices include sugar, bath soap, washing powder, rice, flour and meat products.

Consumer Council of Zimbabwe (CCZ) Matabeleland regional manager Mr Comfort Muchekeza yesterday said retailers are not reviewing downward prices of goods in line with treasury VAT review citing increases in transport costs emanating from increases in toll gate fees.

“Prices continue to rise even though measures have been taken to remove levies and taxes on selected products. This is due to other costs that have risen such as toll fees, electricity tariffs and local authority bills.

“All these have an impact on the cost build-up in the food production value chain. Therefore, businesses and producers whenever they incur any costs, they pass it on to consumers or end users of products.”

The 2024 National Budget has seen toll fees increase by 100 percent on premium roads and 50 percent on other roads.

This has seen industry players calling for Government intervention saying that this will increase their cost of production since transport is the major contributor towards the cost of doing business.

Mr Muchekeza said there is a need to monitor the product prices, especially on basic commodities adding that continuous dialogue between stakeholders involved in food production is encouraged to appreciate their concerns.

“Incentives should be put in place for industries, such as loans for retooling and ease of doing business index improvement,” he said. —chronicle