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Gold Leaf: Tobacco Farmers Threaten Sales Boycott over Tax Deductions

Harare – Tobacco farmers are refusing to smoke the peace pipe, literally. The producers have threatened to withdraw their crop from the mar...

Harare – Tobacco farmers are refusing to smoke the peace pipe, literally. The producers have threatened to withdraw their crop from the market if the Zimbabwe Revenue Authority (Zimra) proceeds with a prescribed 10 percent deduction on farmers without tax clearance.

At the onset of sales, Zimra directed Tobacco Industry and Marketing Board (TIMB) to deduct the tax to spruce treasury coffers – however, the order is facing firm opposition.

By Derick Matsengarwodzi
In a circular to TIMB, Zimra directed auction floors to deduct 10 percent tax on all tobacco sales, citing section 80 (2) of the income tax chapter 23:06.
Tobacco Farmers are Protesting Zimra Tax 

As of writing the, directive has not been implemented as farmers voiced their concerns, saying the execution will wipeout the Reserve Bank of Zimbabwe (RBZ) 5 percent export incentive introduced alongside bond notes to encourage exports.

12 days of trading have raked in $33 million in sales, and the tax deduction is yet to be implemented, while price fixing has also been alleged on the market.

Despite the lucrative returns, gold leaf farmers’ lives are exactly the opposite. TIMB reveals that the number of tobacco farmers plunged by 22 percent from 92 430 to 71 728 in the 2015/16 farming season as they failed to raise money for inputs due to poor prices.

Finance minister highlighted the same concerns.

“The major concern for growers as the marketing season commences is the declining viability of tobacco cultivation. There is need to put minds together and find ways of improving viability by minimising the costs and maximizing the productivity,” he said during his past budget speeches.

As the cash crisis persist, RBZ has given banks the green light to allow tobacco farmers to withdraw $1 000 from initial sale and $500 thereafter, to allow producers pay for expenses incurred.

Tobacco merchants mobilised $600 million to purchase inputs.

“The RBZ, TIMB and Tobacco Famers Associations wish to advise that under the current 2017 tobacco selling, individual small-scale farmers will be allowed to withdraw cash of up to $1 000 from their first tobacco sale and a maximum of up to $500 for subsequent sales,” said the joint statement.

Large scale farmers need to justify cash withdrawals with application from their respective banks. – Additional Reporting from Online Sources

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