‘Strategic reserve levy increase to affect business’
THE proposed upward review of the Strategic Reserve Levy by US$0,03 and US$0,05 per litre of diesel and petrol, respectively, effective from January 1, 2024, will have significant implications for both businesses and consumers, the Confederation of Zimbabwe Retailers (CZR) has said.
In his 2024 National Budget, Finance, Economic Development and Investment Promotion Minister, Professor Mthuli Ncube, said in order to raise resources to finance road infrastructure, the proposed introduction of the Strategic Reserve Levy will be reviewed upwards to support development.
Other proposed interventions on raising resources to finance road infrastructure as proposed by Prof Ncube include an upward review of toll fees on premium roads, that is, Harare-Beitbridge and Plumtree-Mutare and other roads, with effect from January 1, 2024.
He said revenue derived from the increased fees will be remitted to the Consolidated Revenue Fund.
He also proposed that passport and selected fees charged by the Central Vehicle Registry be increased, with effect from January 1, 2024 saying that revenue generated from the above measures will be ring-fenced towards road infrastructure development.
However, CZR said it was essential to consider the potential impact on businesses and consumers of the proposed initiatives.
In a statement in response to the 2024 National Budget, CZR president Mr Denford Mutashu said the higher levy is likely to result in increased fuel prices, which can have a ripple effect on transportation costs, production expenses, and ultimately consumer prices. “By increasing the levy, the Government seeks to enhance its capacity to respond to any disruptions or emergencies in the fuel market.
“However, this can put additional strain on businesses, especially those heavily reliant on fuel for their operations, and may impact consumers’ purchasing power,” said Mr Mutashu.
“It is crucial for the Government to strike a balance between revenue generation and the affordability of fuel, as well as to ensure transparent and efficient utilisation of the funds collected through the Strategic Reserve Levy to enhance the resilience of the fuel supply chain.”
The cost of doing business has been a major discussion when it comes to competitiveness of local products, locally and even in the international market with fuel prices and power shortages being some of the contributing factors.
Mr Mutashu said the Strategic Reserve Levy is a measure aimed at generating revenue to bolster the strategic reserves of fuel, ensuring a stable and secure supply in the country. However, the general populace and businesses will be greatly affected, he added.
Commenting on the same issue, the Zimbabwe National Chamber of Commerce (ZNCC) said in Zimbabwe transport costs are already high compared to regional neighbours.
The chamber said the increase in the Strategic Reserve levy coupled with the proposed 100 percent upward review in toll fees on other roads, not mentioning premium roads, will further strain the margins for businesses in almost every sector of the economy. —chronicle
