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Will 40% surtax on basic commodities imports cause shortages?

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olivine dlite “Zimbabweans must brace for a price hike and shortages of cooking oil, washing powder and laundry bar soaps as the downside of the introduction of a 40 percent surtax on the imported basics takes effect.

In an effort to protect the local industry from unfair competition from imported products, the government hiked import duty on selected products such as cooking oil, margarine, soap tablets and bars and washing powder from 10 percent to 40 percent last month.

The move seems to be backfiring after Bliss Brands, the South African maker of washing powder MAQ, this week decided to cease exports into Zimbabwe citing high costs that are being caused by the tax, which was imposed at the start of August, without any prior notification.”

This is a report in a local newspaper, The Daily News.

Well, I think the introduction of this tax was long overdue and should be extended to other products which local companies can supply. I think some companies are closing due to low demand for their products as imports are flooding the market.

Olivine cooking oil is now available in most supermarkets, although at a few cents more expensive than popular South African brands. There will be no shaorage at all. Instead Olivine Industries will be able to employ more people, who will contribute to economic growth in the form of taxes as well as their own consumption.

Those are my thoughts. What do you think?

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Phillip Chichoni is the publisher of BusinessLink magazine, a monthly digital publication that provides insights and inspiration to CEOs and executives of small to midsize companies and entrepreneurs aspiring to build innovative businesses. Click below to sample previous issues.

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