Even In The USA, The Transaction Tax Is Being Considered, Proponents Want It To Be The Only Tax Levied

0
211

Posted

So in October 2018, Finance and Economic Development Minister, Mthuli Ncube introduced a 2% tax on all electronic transactions in Zimbabwe. The tax has been subject to a lot of debate ever since. The legality of some aspects of it is in question but the government is raising much more revenue out of it than was possible before.

advertisementUse EcoCash to buy NetOne & Telecel airtime online. Tap here

advertisement

One of our readers here on Techzim shared some interesting comments about this tax and I am pasting their email in full here. They didn’t include their name, I wish they had so we could fully credit them:

You may be interested to know that the transaction tax is under serious consideration in the US right at this very moment and the idea is gaining traction there. If you look on Wikipedia the idea was first mooted in 1936 by John Maynard Keynes, but was unsustainable because there was no practical way to track it in the pre-computer era.

advertisement

In the modern day, in which anything and everything can be tracked, it is actually a fair and equitable option – in my view. The transaction tax already exists in India, where like us, they have a huge informal sector.

The thing is that it is too, well …. taxing, when heaped on top of PAYE, VAT, estate duties, withholding taxes, etc. So what we actually need is to work towards a situation where all other other taxes are scrapped and replaced with one single transaction tax across the board. The idea may need refining and tweaking (eg exemptions for salaries/wages), but it is possible.

With a single transaction tax, gone would be the days of everyone trying to find ways around the many different forms of taxes and exemptions (lawyers and accountants charging fortunes) and those who spend more pay more tax. Those trying to work their way up are not overburdened. In Zimbabwe where our systems are not as sophisticated as those in the west, and the informal sector near impossible to pin down, transaction tax algorithms are dead-easy for computers to run, no exemptions, no fancy footwork and it’s equitable and applies to every single transaction. The trick would to find the correct % value at which it would work, though I would hazard a guess to say it would only be around 3%.

In Mauritius, the government doubled their tax revenue some years back when they dropped taxes from 40% to 15%. Nobody could be bothered to try find the loopholes and many accountants went into the financial advisory business. Transaction Taxes are perhaps a similar concept on another level – inherently people don’t like to be dishonest.

And yes – transactions under $10 should be transaction taxed – even at a rate of 1%. The poor use roads, hospitals and schools the same as everyone. If someone contributes $1 a month on a $100 of transactions, and it (really does) bring them free schooling, hospitals, good roads, running water – what’s not to love? The reason that Zimbabweans dislike tax perhaps more than many is that there is all-pervading knowledge that the money is not going where it is supposed to.

If one considers the top 10 ‘happiest’ nations on earth, they are all heavily taxed but their infrastructure and social systems are near-utopian and people accept the taxes as they are totally transparent (i.e trustworthy) egalitarian and the people see, experience and live with the spectacular benefits every day.

So in Zimbabwe, the rot of corruption and lack of accountability has got to be tackled before any kind of financial, judicial changes (among a host of others) can be effected in a real sense. If you have read Steve Covey’s 7 Habits of a Successful Business, you may know that he wrote another book ‘The 8th Habit’ which is about Trust – without which he argues the 7 Habits cannot function. It is Trust which lies broken on the floor in Zimbabwe and which can only be rebuilt through right actions, rather than right – but empty – words.

Sorry this turned into a bit of a rant, but it is all very interesting stuff!

Oh it is very interesting indeed and I for one enjoyed reading this and following up on some of the examples given. For the lazy ones ones, here is a paragraph from Wikipedia regarding this:

The Automated Payment Transaction (APT) tax is a small, uniform tax on all economic transactions — involve simplification, base broadening, reductions in marginal tax rates, the elimination of tax and information returns and the automatic collection of tax revenues at the payment source. This proposal is to replace all United States taxes with a single tax (using a low rate) on every transaction in the economy. The APT approach would extend the tax base from income, consumption and wealth to all transactions. Proponents regard it as a revenue neutral transactions tax, whose tax base is primarily made up of financial transactions. It is based on the fundamental view of taxation as a “public brokerage fee accessed by the government to pay for the provision of the monetary, legal and political institutions that protect private property rights and facilitate market trade and commerce.”[1] The APT tax extends the tax reform ideas of John Maynard Keynes,[2] James Tobin[3] and Lawrence Summers,[4] to their logical conclusion, namely to tax the broadest possible tax base at the lowest possible tax rate. The goal is to significantly improve economic efficiency, enhance stability in financial markets, and reduce to a minimum the costs of tax administration (assessment, collection, and compliance costs).

So if it’s you who sent us that, please reach out to us so we can properly credit you and also so we can learn about some of this stuff. Thanks!

Quick NetOne, Telecel, Africom, Econet Airtime Recharge

WhatsApp Discussions

Click to join a Techzim WhatsApp group:
https://chat.whatsapp.com/I943xvXWONvF7rs53xoohr

If you find the group full, please notify us on +263 715 071 199 and we'll update the link.

LEAVE A REPLY

Please enter your comment!
Please enter your name here