THE government yesterday suspended plans to introduce a 10% withholding tax on tobacco farmers without clearance certificates, a victory for farmers, who had asked authorities to reverse the decision.
The announcement came barely a few hours after tobacco buying was temporarily halted yesterday at Boka auction floors, as farmers protested against the withholding tax and cash payment delays.
Agriculture minister Joseph Made yesterday told the National Assembly that the withholding tax had been suspended.
“So we have made the appeal that the issue of 10% be suspended for now. This has been agreed to and I am happy to announce that there won’t be any 10% tax paid by farmers relating to this season. It’s not only tobacco farmers, but it also affects other farmers,” he said.
Made said the decision to suspend the tax was reached after discussions with the Finance ministry.
“We have already been in discussion with the ministry of Finance. The law is very clear on that issue on what farmers must pay. However, some years back, that payment to be made by farmers was suspended in order to bring up farmers and support production. So the Zimbabwe Revenue Authority (Zimra) was going according to the law.”
Withholding tax was introduced in 2004, but had been suspended to give breathing space for farmers.
Last week, Zimra told the Tobacco Industry and Marketing Board (TIMB) to deduct 10% withholding tax on farmers without tax clearance certificates, causing uproar, as the tobacco farmers felt they had not been consulted, with farmers’ associations petitioning Treasury on the move they thought was ill-advised and would suffocate farmers.
Earlier, business came to a standstill at Boka Tobacco Auction Floor when farmers closed the entrance at 3am, protesting against the withholding tax and failure by banks to give them cash.
Baton-wielding police officers were called to bring back normalcy at the floor. Sanity returned at around 10am.
When Newsday visited the auction floor, farmers were stuck in queues at banking halls, an indication the financial institutions were grappling to pay out the farmers.
“The protest started at around 3am, but the police had to be called in to bring order at around 10am. It started when farmers closed all entrances and we were saying let them give money to those who come first and no one should come in before we are served first. I came here on Monday, but some came last week and are still here waiting for money,” a Macheke farmer, Trust Mutero said.
Despite an order by the Reserve Bank of Zimbabwe to pay farmers $1 000 at first sale, banks are battling to cope with cash demands, with some giving as little as $50 at the auction floors.
TIMB chief executive officer, Andrew Matibiri confirmed the disturbances, saying it was up to auction floors to resolve the situation.
“We understand the concerns of the farmers about cash. But that is an issue of banks and auction floors,” he said.