HomeLocalMthuli Ncube’s wings clipped

Mthuli Ncube’s wings clipped

BY NQOBANI NDLOVU

The High Court says Finance minister Mthuli Ncube usurped Parliament’s powers through a statutory instrument that created a new taxation regime for the fuel industry two years ago.

On June 5, 2020 Ncube published Statutory Instrument 123A of 2020 that created a new taxation regime in respect of a carbon tax and the NocZim redemption levy, which the court has now scrapped.

The judgement delivered by High Court judge Justice Siyabona Musithu last week will come as a relief to the motoring public following complaints over excessive taxation in the fuel sector, resulting in the country’s fuel being one of the most expensive in Africa.

The increases in world oil prices mean that total landed cost for fuel locally also increases, while a number of taxes and levies remain extremely high as compared to regional peers.

Industry and fuel players have been calling for an overhaul of the fuel tax regime.

“It is ordered that Section 3 (2) of the Finance Act (Chapter 23:04] be and is hereby declared to be inconsistent with section 134 (a) as read with section 117 (2) (c) of the constitution of

Zimbabwe, and consequently unconstitutional,” Justice Musithu ruled.

“The Finance (Amendment of Sections 22E (1) and 22H of Finance Act) Regulations, 2020 published as SI 123A of 2020 be and are hereby declared a nullity and are set aside.

“The Finance (Amendment of Sections 22E (1) and 22H of the Finance Act)  Regulations, 2020 published as SI 145 of 2020 be and are hereby declared a nullity and are set aside.”

Opposition legislator Innocent Gonese represented by Citizens Coalition for Change (CCC) interim vice president Tendai Biti filed the High Court application challenging Ncube’s SI as an illegal amendment of the Finance Act.

Ncube’s SI amended the Finance Act to allow the State to collect carbon tax on diesel and petrol by creating a new taxation regime in relation to carbon tax and the National Oil Company of Zimbabwe (Noczim) Redemption Levy.

Gonese submitted that only the legislature had the power to amend the Finance Act as he charged that Ncube had usurped Parliament’s powers.

“On 5 June 2020, the respondent published SI 123A of 2020.

“That instrument created a new taxation regime in respect of carbon tax and the Noczim Redemption Levy,” Gonese had submitted through his lawyers.

“That new obligation is dependent on whether one is using free funds or not.

“The new regime had the following effect: those importing fuel using free funds would continue paying carbon tax at the rate of 0.03 cents per litre per petroleum product or 5% of the cost.

“Those importing fuel other than through free funds would pay thirty two point five Zimbabwean cents per litre of diesel and one hundred Zimbabwean cents per litre of petrol.”

Ncube was cited as the respondent in the court application.

“The new Noczim levy was provided for in terms of section 22 (H) of the regulations, and it provided that the levy in respect of those importing fuel using free funds would be calculated at the rate.”

However, Gonese argued that Ncube has no power to impose a carbon tax between those importers who use free funds and those who do not.

“The applicant contends that section 3(2) of the Finance Act is unconstitutional to the extent that it permits the respondent to amend charges even those made by Parliament,” he submitted.

“The power to make, amend and repeal laws is the domain of Parliament in keeping with the principle of separation of powers as espoused in s 3 (2) (e) of the constitution.

“It is one of the key tenets of a constitutional democracy.

“Section 3 (1)(a) of the constitution ingrains the supremacy of the constitution in the Zimbabwean legal system.

“Section 117 (1) of the constitution vests legislative authority in the legislature.

“The applicant contends that SI 123A of 2020 and SI 145 of 2020 characterise an abuse of power and the law.

“The respondent could not amend an Act of Parliament as he had done.

“His conduct ignored the fact that the constitution was anchored on the principle of separation of powers as espoused in s 3(2) () of the constitution.”

The price of petrol was recently set at US$1.63 a litre while diesel costs US$1.71.

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