Grain Millers Call on Mthuli Ncube to Revoke 15% Rice Tax

The Grain Millers Association of Zimbabwe (GMAZ) is calling on Finance, Economic Development, and Investment Promotion Minister Mthuli Ncube to retract the recent implementation of a 15% Value Added Tax (VAT), citing concerns over its impact on rice prices. Minister Ncube introduced Statutory Instrument 15 of 2024 on February 9th.

In a released statement, GMAZ President Tafadzwa Musarara expressed apprehension that the 15% VAT would escalate the cost of rice and potentially flood the Zimbabwean market with untaxed rice from South Africa. Musarara warned that the imposition of VAT could elevate the price of a 2kg bag of rice from US$2.00 to US$2.30 or US$2.40. Additionally, due to pricing complications, retailers might even sell the same product for as much as US$3.00, significantly burdening consumer spending.

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Musarara highlighted the competitive advantage of VAT-free rice from South Africa, which could soon dominate the local market, endangering approximately 2,800 jobs in the domestic rice sector and rendering existing infrastructure redundant. Moreover, he cautioned that the government’s anticipated revenue from VAT collection would likely fall short, compounded by the loss of employment-related tax revenues resulting from job losses.

Emphasizing the significance of rice as the second most preferred food in Zimbabwe, with a monthly consumption of 15,000 metric tonnes expected to rise to 22,500 by 2028, Musarara underscored its nutritional benefits over maize-meal. He pointed out that rice is low in fat, cholesterol-free, high in fiber, and has a lower glycemic index compared to maize-meal, which is crucial in combating non-communicable diseases like diabetes. Additionally, being gluten-free makes rice suitable for individuals with gastrointestinal health challenges.

The statement also noted the country’s ongoing struggle with successive price increases since the beginning of the year, attributed to various tax measures introduced in the 2024 National Budget by the Treasury.