STATUTORY Instrument 80A of 2007 is more fully known as the Customs and Excise (Designation of Luxury Items) Notice, 2007.
This Statutory Instrument was promulgated by the Minister of Finance in terms of Section 115(2) of the Customs and Excise Act (Chapter 23:02).
The regulations came into effect on April 5, 2007. Basically, the Statutory Instrument provides a list of goods that will attract customs duty and value added tax in US dollars, Euros or any other currency denominated under the Exchange Control (General) Order, 1996 i.e. Statutory Instrument 110 of 1996 upon the importation of the said goods into Zimbabwe.
Every resident of Zimbabwe as well as every non-resident person who imports the designated so called luxury items into Zimbabwe shall be liable to pay customs duty and value added tax in foreign currency. The list of such designated goods is long and it varies from the importation of flue-cured tobacco, cigarettes, trunks, suitcases, handbags, wooden kitchen ware, table ware, electric blankets, tubes, pipes, motor vehicles, mattresses etc.
The lawful and legal currency of Zimbabwe is the Zimbabwe dollar. Thus, prices of goods and services within Zimbabwe shall be denominated in Zimbabwean dollars unless there is a lawful exception to the contrary. My understanding and interpretation of section 115(2) of the Customs and Excise Act does not imply that the Minister of Finance has the relevant legislative authority to promulgate regulations that make it mandatory for customs duty and value added tax in Zimbabwe to be paid in foreign currency for a certain category of so-called luxury goods.
Section 6 of the Reserve Bank of Zimbabwe Act (Chapter 22:15) clearly states that some of the main functions of the Reserve Bank are to regulate Zimbabwe's monetary system as well as to achieve and maintain the stability of the Zimbabwe dollar. The Reserve Bank of Zimbabwe Act also unequivocally states that the legal tender in Zimbabwe shall be the Zimbabwean dollar.
In terms of Section 47 of the Reserve Bank of Zimbabwe Act, the Minister of Finance is empowered to formulate the exchange rate policy of Zimbabwe in consultation with the board of the Reserve Bank of Zimbabwe and in doing so, the Minister shall ensure that the exchange rate policy is consistent with the objectives of the monetary policy of Zimbabwe.
It therefore, logically follows that it is clearly unlawful for the Minister of Finance to promulgate subsidiary legislation the main effect of which is to impose the payment of customs duty and value added tax in foreign currency upon the importation of so-called luxury goods into Zimbabwe. The writer cannot find any legal basis upon which the Minister of Finance can promulgate regulations whose other effect is to virtually dollarise the payment of customs duty and value added tax in Zimbabwe.
The lawful currency in Zimbabwe is our very own Zimbabwean dollar and not the US dollar, the British pound sterling, the Euro and/or any other foreign currency for that matter. Even the Banking Act (Chapter 24:20) does not give the Minister of Finance the legal authority to effect a partial dollarisation of the Zimbabwean economy. What the Minister of Finance can lawfully do in terms of the laws of our country is to formulate the exchange rate policy and this does not mean that he can also promulgate that in certain circumstances; customs duty and value added tax payable in Zimbabwe shall be paid in foreign currency.
The Minister of Finance should not be allowed to dollarise a portion of business transactions in Zimbabwe through the back door. Whilst I appreciate that scarce foreign currency should not be used to import luxury goods into Zimbabwe, the Minister of Finance is still legally bound to follow the laws of the country and hence; he should not promulgate subsidiary legislation is clearly unlawful and that does not derive any legality from the Reserve Bank of Zimbabwe Act (Chapter 22:15), the Customs and Excise Act (Chapter 23:02), the Banking Act (Chapter 24:20), the Finance Act (Chapter 23:04) or even from the Constitution of Zimbabwe.
Statutory Instrument 80A of 2007 will inevitably lead to the escalation of the prices of motor vehicles, furniture and most of the goods that are listed in the schedule to the Statutory Instrument. It is a fact that most goods are being imported into Zimbabwe mainly because one cannot find competitively priced alternatives locally and/or goods are simply not available in the country any more.
Thus; the majority of our people are left with no other alternative but to import goods such as second hand motor vehicles simply because locally-assembled brand new motor vehicles and even second hand vehicles are hardly available. Whilst I do not profess any expertise in the field of economics, I can safely state that what our economy needs are far reaching measures to resuscitate the ailing manufacturing and industrial sectors.
We should come up with economic policies that promote efficient and sustainable import substitution activities. I have always wondered why we have to import cigarettes into Zimbabwe instead of simply resuscitating the tobacco farming and tobacco manufacturing sectors. Instead of our people having to resort to the importation of second hand Japanese motor vehicles, we could simply initiate viable policies to resuscitate Willowvale Mazda Motor Industries and ensure that those vehicles are easily available locally. Such a policy will obviously create massive employment opportunities and indeed; our comatose economy can be easily revived.
To the extent that Statutory Instrument 80A of 2007 is inconsistent with the relevant laws of Zimbabwe, it can therefore be successfully challenged in a court of law. As long as the Zimbabwe dollar remains the only legal and lawful tender within the borders of our country, Statutory Instrument 80A of 2007 cannot therefore successfully withstand a legal challenge in a competent court of law.
Obert Chaurura Gutu is a Zimbabwean lawyer and writes form Harare
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