Prosper Ndlovu, Business Editor
THE grain milling industry has written to Government proposing that it reverses the 15 percent value added tax (VAT) on rice, which was announced in the 2017 national budget statement.
Grain Millers Association of Zimbabwe chairman Mr Tafadzwa Musarara appealed to Acting President Emmerson Mnangagwa and Acting Industry and Commerce Minister Dr Joseph Made during their tour of milling companies in Bulawayo Thursday, to engage Treasury over the issue.
He said millers were not happy with the policy, which they felt would inflate pricing, burden the consumer and curtail demand for the product.
“Before the budget there was no VAT tax on rice, it was exempted. Now the 2017 budget is proposing an introduction of 15 percent VAT on rice. This ultimately means an increase of at least 15 percent on the cost of rice,” said Mr Musarara.
A 2kg pack of rice costs about $1.90.
He said rice plays a critical role in the dietary requirements of locals despite the fact that much of it is not grown locally. As such millers feel increasing its price now is “unfortunate and sad reading” as consumers opt for cheaper options in a difficult economy.
“Government wants to collect money but there was no consultation. We have written to the minister (Chinamasa) to raise that. We want that the situation that obtained before the budget continues, which is no VAT on rice,” said Mr Musarara.
In response Acting President Mnangagwa pledged to engage Finance Minister Patrick Chinamasa over the issue. He, however, said there was a need to balance what Government wants and industry interests.
“But you (millers) have not been articulate on what that VAT does to this particular product. The first thing you mentioned is that it increases the price of rice. Is it only increasing the price because you want to maintain the level or margin of profits? But we will look into that and see. If we survived before without it, will we survive in the future without it,” he said.
“Those are the issues, which we will interrogate and come to some compromise. But do not hesitate to inform us about any challenges you face in the industry, which you think the Government can help. We work together and not against each other to ensure we both succeed.”