Government has reversed a decision announced last week to levy a 10 percent tax on gross sales of tobacco farmers who do not have clearance certificates.
This follows a meeting between Agriculture, Mechanisation and Irrigation Development Minister Dr Joseph Made and his Finance and Economic Development counterpart Cde Patrick Chinamasa over the emotive announcement which rattled the tobacco selling season, with farmers threatening to withhold their crop in protest.
The Zimbabwe Revenue Authority last week instructed tobacco auction floors to deduct a 10 percent tax on gross sales of farmers who failed to produce valid tax clearance certificates as at March 31.
Dr Made said farmers had pleaded with Government to reconsider the tax which they argued could cripple the nascent industry.
He said they had resolved the matter with Minister Chinamasa that no farmer would have his/her money deducted.
Dr Made urged tobacco growers to continue delivering their crop to the floors without fear as the tax issue had been resolved.
“Farmers had made a plea to Government. We had a discussion with Minister Chinamasa and I am pleased that we have amicably resolved the matter and reached an agreement that is expected to satisfy farmers and Zimra,” said Dr Made yesterday.
“Farmers should not blame Zimra as it was working within the confines of the law.
“Farmers should go on with their business. Tobacco should continue to come to the floors especially now as we are approaching the Easter and Independence Day holidays,” he said.
Dr Made also said a new e-marketing facility introduced this season should not interfere with the selling of the golden leaf by inconveniencing farmers.
Zimbabwe Farmers’ Union president Mr Wonder Chabikwa welcomed the decision taken by Government to stop implementation of the 10 percent tax deduction which he feared would hurt small farmers the most.
He said imposition of a 10 percent tax would also bring back middlemen into the tobacco sector.
Mr Chabikwa said instead of Zimra benefiting, it was middlemen who had tax clearance certificates who would emerge the winner against smallholder farmers and Government.
“The timing of the tax was not good. The Reserve Bank of Zimbabwe introduced a five percent export incentive facility to motivate farmers to improve on quality and quantity of the crop. The introduction of the 10 percent tax would erode all these efforts,” said Mr Chabikwa.
“The tobacco sector is one of the most lucrative and such moves could destroy the industry. It does not help to kill the goose that lays golden egg,” he said.
Meanwhile, tobacco farmers at Boka Tobacco Floors demonstrated against cash shortages and the imposition of the 10 percent tax by Zimra.
This disrupted sales.
Some farmers were demanding to get into the auction floors.
Anti-riot police were maintaining order.
The farmers complained that banks were taking long to give them cash and urged Government to intervene.
One farmer from Guruve said it was bad that tobacco farmers who were bringing in foreign currency were experiencing cash challenges.
He said farmers were not worried about getting the money in bond notes but about the long time they waited before getting the cash.
“We can use plastic money to buy inputs and groceries but we also need cash to pay labourers who helped us reap and process the crop for the market,” said the farmer who refused to be named.
“We should not spend long periods waiting for our money. We do not have money to buy food and this makes us appear like destitutes,” he said.
Nearly 100 000 farmers engage in tobacco farming while close to one million people are directly dependent on the golden leaf.
The crop generates 30 percent of the country’s foreign currency, bringing in over $600 million per year.