Govt comes under fire over Huawei tax exemption

GOVERNMENT continues to come under fire for exempting Chinese telecommunications giant, Huawei Technologies, from paying income tax, with one of the lobby groups describing the move as not in the spirit of tax justice, constitutionalism and progressive.

Government recently updated Statutory Instrument (SI) 25 of 2020, exempting Huawei Technologies from paying income tax.

The old SI 227 of 2019 had exempted Huawei from paying income tax since August 2014, but this has now been backdated to December 2009.

The move has, however, angered a watchdog organisation, the Zimbabwe Coalition on Debt and Development (Zimcodd), which claimed the provision violated section 298(1)(b)(i) of the Constitution, which states that “the burden of taxation must be shared fairly”.

“It is, therefore, worrisome that the government has decided to give the foreign monopoly tax exemption backdating 11 years ago when the same government is milking the ordinary citizen through the unpopular and unjust 2% intermediated money transfer tax, among a host of other retrogressive taxes,” the lobby group said.

“Zimcodd is gravely concerned by the unscrupulous trend of bypassing Parliament, which is the constitutionally mandated law-making institution. Between January 2019 and January 2020, 311 statutory instruments were decreed by individual ministers with the blessing of Cabinet.

“Systematically, the Executive is usurping powers of the Legislature and by default, power of the electorate. It is a cause for concern that at this pace, democratic accountability is gradually being eroded and replaced by dictatorial tendencies by the Executive.”

The lobby group said the move supported the trending discourse of State capture by the elite.

Instead of exempting Huawei Technologies from paying income tax, Zimcodd said government should be more concerned with how its domestic resource mobilisation could be further enhanced by taxing rich companies so that the welfare and developmental interest of the poor, who are already reeling under the heavy burden of taxation, are met.

“The government’s income tax exemption is, therefore, not in the spirit of tax justice, constitutionalism and progressive taxation in Zimbabwe,” Zimcodd said.

The body said it was concerned that by instituting preferential treatment on Huawei Technologies, Finance minister Mthuli Ncube was violating the principle of comparative treatment among economic players or investors, at the same time setting a bad precedence for other would-be investors as there is high likelihood that more investors will claim equal treatment.

“The government must immediately repeal the said statutory instrument and respect section 119(3) of the national Constitution, which clearly states that: ‘All institutions and agencies of the State and government at every level are accountable to Parliament’,” Zimcodd said.

In the interest of constitutionalism and the rule of law, Zimcodd said government must submit its intentions to exempt Huawei from paying income tax to Parliament and it will be the role of the Legislature to consult the public, debate and scrutinise this intention and see whether it serves the collective aspirations of Zimbabweans.–

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