Bill Watch36/2014Mid Term Fiscal Policy Review Debate, Finance (No. 2) Bill,22September2014

Bill Watch36/2014Mid Term Fiscal Policy Review Debate, Finance (No. 2) Bill,22September2014

Sovereign Wealth Fund of Zimbabwe Bill

BILL WATCH 36/2014

[22nd September 2014]

Mid Term Fiscal Policy Review Debate, Finance (No. 2) Bill,
Sovereign Wealth Fund of Zimbabwe Bill

Mid Term Fiscal Policy Review

Item No. 1 on Tuesday’s National Assembly agenda is the debate on “the adjourned motion that leave be granted to bring in a Finance Bill”. This is Parliament-speak for the debate on the Mid-Year Fiscal Policy Review Statement presented by the Minister of Finance and Economic Development on 11th September. If the motion is approved, and if all goes according to plan, the National Assembly will then pass the Finance (No. 2) Bill through all its stages and send it to the Senate to be passed by the Senate before the end of the week. The Minister’s aim is probably to have the Bill gazetted and in force as an Act on or before the 1st October, the effective date of some of the tax measures that it contains. [Both the Fiscal Policy Review Statement and the Ministry of Finance and Economic Development’s departmental draft of the Bill are available from the addresses specified at the end of this bulletin. Also available is the Monetary Policy Statement issued by the Governor of the Reserve Bank of Zimbabwe on 25th August, which the Minister described as complementing his Fiscal Policy Review.]

Note: Commencement of the debate on the Fiscal Policy Review was delayed by a procedural defect, which was identified by the Speaker in a formal ruling when the National Assembly met on Tuesday 16th September. In his ruling the Speaker said that the Minister had not followed the correct procedure: he had simply made his statement, without moving a motion to the effect that he be given leave to bring in a Bill to make provision for the revenue and public funds of Zimbabwe. i.e., a Finance Bill. The proceedings so far, said the Speaker, were therefore unconstitutional, not in compliance with Standing Orders, and null and void. [Full text of Speaker’s ruling available from the addresses given at the end of this bulletin.] This stopped proceedings temporarily. The next day the Minister admitted his mistake, apologised to the National Assembly and asked it to condone the defect and deem the necessary motion to have been moved. After discussion, during which MDC-T MPs thoroughly enjoyed taking the Minister to taskfor his lapse, the House approved his request by a show of hands. This cleared the way for the coming debate.

Comment: The Minister may have acted in breach of Standing Orders and Parliamentary practice, but the Speaker’s characterisation of the Minister’s lapse as “unconstitutional” can also be criticised. The Speaker justified it by citing section 305(5) of the Constitution, but that provision refers only to an Appropriation Bill to make additional or supplementary allocations for expenditure, not to a Finance Bill such as the present Bill, which is intended to adjust the tax laws in an effort to raise funds to meet expenditure on appropriations authorised by Parliament at the beginning of the year.

Finance (No. 2) Bill

This Bill will be introduced by the Minister of Finance and Economic Developmentif, after debating the Mid-Term Fiscal Policy Review, the National Assembly approves his motion seeking leave to bring in the Bill. The Bill is designed to bring into effect those changes to the taxation laws, as proposed by the Minister in the Fiscal Policy Review, that require approval by Parliament. One of the Minister’s measures has already been implemented by statutory instrument; this is the increase in the excise duty on petrol and diesel, which was brought into effect by SI 140/2014 with effect from the 12th September, the day after presentation of the Fiscal Policy Review.

Among the matters to be provided for in the Bill are:

• reduction from 7% to 5% of the royalty that must be withheld from gold producers on gross proceeds realised by licensed gold buyers
• levying of excise duty on airtime
• penalties to be paid by the contractors and withholding agents of non-resident performing artistes, for failure to withhold or make over the required 15% withholding tax on the gross fees of those artistes
• correction an error in the definition section of the Value Added Tax Act which defines the term "fiscalised electronic register" in two different ways.
• measures to ensure compliance by employers with their obligation to withhold PAYE on fringe benefits for employees.

Sovereign Wealth Fund of Zimbabwe Bill

This Bill was transmitted to the Senate on 17th September after its belated approval by the National Assembly. Readers may recall that the Bill lay dormant for five months after its Second Reading in the National Assembly at the end of March. The delay may have been caused by the Minister of Finance and Economic Development’s decision to make further changes to the original Bill in addition to those already announced in March.

Amendments made on 3rd September Having given one day’s notice of these further amendments, the Minister took the Bill through its Committee Stage on 3rd September. He withdrew one of the amendments he had put on the Order Paper and secured the National Assembly’s approval of the remainder. There was no debate or dissension. The Bill therefore passed its Committee Stage with amendments to a number of the original clauses and several new clauses. [Text of Bill as amended, with amendments highlighted andwith explanatory notes by Veritas, available from the addresses given at the end of this bulletin.]

Banking law amendments Among the changes made on 3rd September was the addition to the Bill of two new clauses affecting banking law. The new clause 32 adds the Small and Medium Enterprises Development Corporation to the list of institutions to which the Banking Act does not apply. The new clause 33 amends the Reserve Bank Act:

• to allow the Reserve Bank to open credits and issue guarantees
• to remove existing restraints on the Reserve Bank’s power to borrow foreign currency [the consent of the Minister will still be necessary]
• to provide that if, when there are two Deputy Governors, there is a vacancy in the office of Governor, the Acting Governor will be a Deputy Governor appointed by the Minister with the approval of the President [the current provision requires the Deputy Governors to act on a rotational basis].

As neither of these amendments is in any way related to the Sovereign Wealth Fund; an appropriate amendment to the Bill’s long title should also have been put to and approved by the National Assembly. The omission should be corrected in the Senate.

The amended Bill was immediately referred to the Parliamentary Legal Committee [PLC] as required by the Constitution. The PLC returned a non-adverse report on 16th September, and the Bill, as amended, was duly passed by the National Assembly on 17th September and transmitted to the Senate. 1

Correction to Bill Watch 34/2014 In a preliminary note on the Committee Stage amendments to the Sovereign Wealth Fund of Zimbabwe Bill, Bill Watch 34/2014 of 9th Septemberincorrectly stated that the original clause 30 of the Bill had been deleted from the Bill by one of the amendments. In fact, the clause was not deleted;the proposal to delete was the amendment that the Minister withdrew. This means that the clause, now renumbered as clause 31, is still in the Bill; it enacts a new version of section 33 of the Zimbabwe Mining Development Corporation Act dealing with special dividends on the sale of diamonds; this new version will take the place of the section inserted in the ZMDC Act by the Finance Act [Act No. 1/2014].

Government Gazette

[items not available from Veritas unless otherwise stated]

Statutory Instrument dated 5th September

Company law SI 137/2014 enacts a new Fifth Table [Liquidator’s Fees] for the Seventh Schedule to the Companies Act.

Statutory instruments dated 12th September

Excise duty on petrol and diesel SI 140/2014 provides for the increased excise duty on petrol, both leaded and unleaded, and diesel, with effect from 12th September, as announced in the Mid-Year Fiscal Policy Review Statement by the Minister of Finance and Economic Development.

Collective bargaining agreements SI 138/2014 affects the Plastic Manufacturing Industry, SI 139/2014 the Battery Manufacturing Industry.

Statutory Instruments dated 19th September

Social workers SI 141/2014 is a set of regulations made by the Minister of Public Service, Labour and Social Welfare that lay down the procedure for electing members of the Council of Social Workers under the Social Workers Act.

Collective bargaining agreement SI 142/2014 affects the Furniture Manufacturing Industry.

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