BY KUDZAI KUWAZA

THE Zimbabwe National Chamber of Commerce (ZNCC) has proposed that the government introduces a land tax to raise the US$3,5 billion required to compensate former white commercial farmers whose land was compulsorily acquired at the turn of the century.

Following many years of a standoff over the amount of compensation required, the government agreed with affected farmers last year that US$3,5 billion would be enough for the settlement.

The ZNCC said the land tax charged from profits on farming activities would help the government avoid piling fresh pressures on already overburdened taxpayers.

In its submission to the Finance and Economic Development ministry and with details about business expectations for the 2022 National Budget, the business lobby said the quantum involved was significant, and the general public cannot afford it.

The 2022 national budget is due to be presented this month, and preparations are already in full swing.

“Regarding the Global Compensation Agreement to pay former commercial farmers US$3,5 billion, resources should come from farming profits through the imposition of a land tax and to ensure that the obligation is not a burden to the general tax payers,” the ZNCC said.

The Global Compensation Deed (GCD) agreement was reached between the white former commercial farmers and the Government of Zimbabwe on July 29, 2020.

It is expected to bring closure to the long-standing land dispute.

The Compensation Deed specifies that the white commercial farmers who were evicted from their land without compensation from 2000 will be paid for improvements on the farms.

Government has engaged United Kingdom-based New State Partners, as financial advisers for the implementation of the agreement.

Finance minister Mthuli Ncube said in a statement mid this year, that a number of possible financing instruments and funding options were already being worked on together with the financial advisers.

These, he said, included, but were not limited to, bonds issued domestically, both listed and unlisted; bonds issued at international markets, both listed and unlisted; listed and unlisted equity; and quasi-equity type instruments among others.

However, the ZNCC has queried the process that was used to engage the financial advisers.

“The honourable Minister of Finance and Economic Development reported in the mid-term budget and economic review statement on the 29th of July 2021 that Treasury had engaged a financial advisor – Newstate Partners UK, to lead and assist in the mobilisation of the US$3,5 billion for compensation,” it said.

“What was not clear is whether due process was followed in engaging the advisor; the cost implications to government; whether parliament was advised of the move; and whether or not local experts were consulted.”

The evaluation process began under the late former president Robert Mugabe, but speeded up under the Emmerson Mnangagwa government.

At least 2 801 former commercial farmers acceded to the compensation out of 2 963 that were approached with the compensation offer.

“The global compensation figure will be payable in instalments as follows: a 50% deposit payable 12 months after signature of the agreement and one quarter of the balance in each subsequent year so that full payment is made over five years,” reads part of the agreement.

According to the agreement, the full amount of the global compensation figure may, however, be paid within 12 months of signature of the agreement if sufficient funds for the purpose are mobilised within this period.

Government was supposed to begin compensating the affected farmers in July this year.

But Ncube has said the parties to the GCD had settled to further defer the payments to 2022 as Covid-19 had slowed down acquisition of financial resources.