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Last Updated: Wednesday, 17 August 2005, 12:49 GMT 13:49 UK
Big tax hikes in 'broke' Zimbabwe
Man with food aid
Some 4m Zimbabweans need food aid
Zimbabwe's finance minister has imposed a string of tax rises to bridge a huge spending shortfall and the effects of drought and slum clearances.

A tax on drinks and cigarettes has been increased by 50% and mobile phone airtime will also be subjected to a 22.5% tax, Herbert Murerwa said.

Zimbabwe is beset with shortages of food, fuel and foreign currency, and rampant unemployment and inflation.

An opposition MP said the extra budget showed that the government was "broke".

South Africa is considering giving an emergency loan to Zimbabwe, so it can repay its debts to the International Monetary Fund and avoid expulsion.

'Suffering'

From September public transport buses will have to pay a quarterly tax and VAT will be raised by 2.5% to 17.5%, Mr Murerwa announced in a supplementary budget.

From the measures, Mr Murerwa said he hoped to raise 6.6 trillion Zimbabwean dollars, which is $356m at the official exchange rate and $146m on the black market rate.

SUPPLEMENTARY TAXES
VAT
Up 2.5% to 17.5%
Small buses
Z$6m quarterly charge
Big buses
Z$18m quarterly charge
Taxis
Z$6m quarterly charge
Cigarettes and drinks
Up 50%
Car imports
Up 15% to 25%
Small miners
To be taxed 5% of minerals produced

A 300ml bottle of Coca Cola was priced at $6,000 on Tuesday.

The opposition Movement for Democratic Change (MDC) said the tax hikes would bring more suffering to Zimbabweans

"What the minister has done is to tell us straight in the face that the government is broke and they are prepared to drive the economy to a fatal crash," the MDC's Tapiwa Mashakada told parliament, AFP reports.

Some of the money will help with food imports to feed some 4m people which the United Nations estimates are in need of food aid.

Some 700,000 people are also trying to cope after their homes or places of work were demolished in a slum clearance programme, the UN says.

Zimbabwe has however, disputed these figures.

In a 45-page response, it accused the UN of indulging "in mathematical extrapolation so as to produce the grossly inflated figure of 700,000".

Government critics blame Zimbabwe's economic problems on the seizure of white-owned land over the past five years.

The government blames food shortages on drought and economic sabotage by Western countries, led by the UK, opposed to land reform.




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