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CZR hails Government’s price stabilisation efforts; promises consumer protection

CZR hails Government’s price stabilisation efforts; promises consumer protection

Story by ZBC Reporter

The Confederation of Zimbabwe Retailers has assured consumers of price stability and protection form

In a statement, CZR president, Denford Mutashu highlighted the various interventions his organisation is making in consultation with the Government to ensure sustained price stability of basic goods and commodities.

“We have noted various concerns expressed in the media and by the public regarding the prices of basic commodities, stemming from the change in VAT status and the reintroduction of duty on basic commodities, effective February 1, 2024. We would like to provide an overview of the current status and outline the measures we are implementing to ensure the availability and optimal pricing of basic foods.

“As of January 1, 2024, SI 248 of 2023 exempted VAT on all basic foods such as Maize Meal, Rice, Sugar, Cooking Oil, flour, and bread. The only change was the transition from zero rating to VAT exempt, resulting in suppliers being unable to claim input VAT on taxable supplies. We estimate the cost of this change to be between 2 and 3%. We understand this decision was made by the government to address the negative impact on the fiscus due to massive VAT refunds on zero-rated products and the anticipated El Nino-induced drought and lower commodity prices which are likely to lower tax revenue the short term. The impact of the 2-3% change was deemed insubstantial and a fair compromise given the circumstances. This aligns with regional parity VAT,” Mutashu explained.

“Other basic items such as soap, washing powder, and petroleum jelly have always been subject to standard VAT rates. They were temporarily exempted for a period of six months, from February to August, before the exemption was extended to January 31, 2024. We appreciate the government’s intervention to alleviate price hikes during that time.”

SI 15 of 2024, effective February 9, 2024, has a similar effect on basic foods, with the exception of rice, which is not included in the exemption list, he added.

Mutashu noted that due to the fact that rice is a staple food in many households and boarding schools, they intend to engage government to have it reinstated on the exemption list.

“This is particularly crucial in light of the expected El Nino-induced drought and to ensure regional parity, as rice is exempt in the region. Locally, being subject to standard VAT will result in a 15% higher cost compared to cross-border traders from South Africa and Mozambique, potentially leading to informal sector trade and rendering local retailers uncompetitive,” he said.

Mutashu said the reintroduction of duty on basic commodities, effective February 1, 2024, was another temporary measure by the government aimed at stabilising prices of basic commodities and they do not anticipate any price increases as local manufacturers have sufficient capacity. Moreover, this measure supports job creation locally and facilitates greater circulation of money within the local economy.”

Mutashu assured consumers they will closely to monitor the situation and maintain ongoing communication with local manufacturers and will swiftly engage the government should local pricing exceed import parity.

He added, “We will now approach the government regarding the exemption of VAT on rice. Overall, we believe the policies implemented are fair and will ensure price stability. His Excellency President Dr ED Mnangagwa and the government, has committed to ensuring that basic commodities are affordable to all, with pricing equivalent to or better than that of regional countries'” he said.

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