Chief Court Reporter
The High Court refused to approve a new fuel carbon tax and National Oil Company of Zimbabwe buyout tax imposed two years ago on the grounds that they could not be levied by the executive through of a regulatory instrument, but were to be imposed directly by Parliament.
The Ministry of Finance and Economic Development introduced both in June 2020 using powers granted by Parliament in the Finance Act.
But the High Court first found that Parliament had no constitutional power to delegate the setting of a tax rate and had to do so itself, thus causing both statutes to fail.
Mutare’s lawyer, Mr. Innocent Gonese, sued the Minister of Finance and Economic Development, Prof. Mthuli Ncube, accusing him of usurping the powers of Parliament through the enactment of Statutory Instruments 123A of 2020 and 145 of 2020 who created the new taxes.
Judge Siyabona Msithu abandoned the statutory instrument on the grounds that the regulations were unconstitutional.
It also ruled that Section 3(2) of the Finance Act was unconstitutional as it gave the Minister broad powers to amend an Act of Parliament.
It repealed the Finance (Amendment to Sections 22E (1) and 22H of the Finance Act) Regulations 2020, published as SI 123A of 2020 and the Finance (Amendment of Sections 22E (1) Regulations 2020 ) and 22H of the finance law). , published as SI 145 of 2020.
Mr Gonese had challenged the powers of Minister Ncube for what amounted to amending an Act of Parliament.
He also argued that the Minister had no authority to apportion the tax between importers who use free funds and those who do not.
In his counter argument, Minister Ncube denied having acted contrary to the law.
Mr. J. Bhudha of the Attorney General’s Civil Division argued that Minister Ncube’s conduct in enforcing the law could not constitute an abuse of power as the law allowed him to change tax rates.
The change in tax rates, he argued, was made under Article 3 of the Finance Law, which gave him the power to act as he did under the law.
It was also argued that the disputed article of the finance law gave the minister the power to modify any tax rate by regulation.
Mr Bhudha also denied that Minister Ncube had created new taxation under the new regulations.
He said the minister was merely carrying out his duties which largely involved formulating the country’s macro-economic policy.
These policies included tax measures aimed at reversing the fiscal imbalance announced on October 1, 2018, which targeted, among others, the volatile fuel sector.
In the final analysis of submissions from counsel for both parties, Judge Msithu was satisfied that Section 3 of the Act as currently structured was unconstitutional as it gave the Minister the power to amend an Act of Parliament .
This, Judge Msithu said, offended certain sections of the Constitution.
Its conclusion is subject to confirmation by the Constitutional Court.
Once the court determined that the impugned section was unconstitutional, the fate of the two statutes was sealed insofar as the Minister sought to regulate through them matters which are the prerogative of Parliament.
In this regard, Justice Msithu stated that the Constitution did not permit the Legislature to delegate legislative powers to subordinate bodies or authorities the effect of which was to enable such subordinate bodies to repeal or amend Acts of Parliament .