There is an old article in which I tried to articulate some of the reasons why most Zimbabweans have lost trust in banks and it is worth reading as a precursor to this latest instalment in the saga. Customers of a certain bank received communication from the bank that it had not been charging 2% on transactions dating back 2 whole years and that the bank would collect the amount due over the next 3 months. Firstly people were confused then bewildered and finally angered. Let’s look a little deeper into the story to understand how this latest development once again paints banks red in Zimbabwe.

2% tax was not charged

As the explanation goes the bank was not charging the 2% tax on transactions as it should’ve. And of course, where no tax is charged, no tax can be remitted. An undesirable state of affairs. The customer was, of course, none the wiser and would’ve already been choked up by the alarmingly high cost of transacting that the absence of the 2% charge would’ve slipped their attention. Nor was it the customers’ responsibility to know or calculate.

Unapologetic

The bank is clearly in the wrong here. They failed to collect and therefore remit tax. One could go as far as to say banks denied customers from playing their part and fulfilling their patriotic duty by adding to national coffers. One won’t say it but one could. The bank after 2 years of making this mistake at least once a month for the infrequent customer and evidently more for the frequent user has simply come through and said: “hey guys, we are taking the money”. No apology, no satisfactory explanation just “it is what it is”.

No consequences

As far as we know there are no consequences for the bank at this stage. It doesn’t look like any action will be taken against the bank and this is worrying but not surprising. Being given free rein to flout a law is the kind of stuff that makes people think “well the bank isn’t one of us”. If I could elect not to pay the 2% tax I wonder how long they would let me do so for before they visit me. Unfortunately when dealing with matters of public opinion you not only need to be upright but you need to be seen to be upright and this instance the bank, regulator and tax authority all have failed that test.

Consumers will have to pay in 3 months

Perhaps the most irksome part of this is that the bank has chosen to recoup the unpaid tax in 3 months. Assuming you transacted evenly over the two years you will be asked to pay 8 months worth of tax in one month. And yes to be fair the value of the Zimbabwean dollar has surrendered a lot of ground since October 2018. So the tax from anything over 5 months ago is a fraction on the current Zimbabwean dollar value. It does however still seem harsh on the client who was willingly compliant while the bank erred.

Why Zimbabweans hate Banks

While we have no way of telling for sure how the same story would’ve played out in another jurisdiction what we do know is that the errant banks seem to have received preferential treatment. To add insult to injury Finance Minister Professor Mthuli Ncube slapped informal businesses with hefty presumptive taxes in search of more tax revenue when they have let this revenue go for two years without a peep. By now we’ve all seen the messages where people have advised each other to switch banks before the carnage starts. There is no love to be lost between Zimbabweans and the banking sector over the latest development.