HARARE – Prominent lawyer and opposition politician Fadzayi Mahere has sharply criticised the government’s latest proposal to introduce a progressive tax on cash withdrawals, warning that the measure risks further undermining public confidence in the formal banking system and could unintentionally encourage money laundering.
Mahere delivered the rebuke in a strongly worded post published on her official Facebook page this week, responding to Treasury’s announcement in the 2025 National Budget proposals. The budget outlines a new levy that would be applied on monthly cash withdrawals, with tiers ranging from 0% to 3%, depending on the amount withdrawn and whether the account holder is an individual or a corporate entity. Government argues that the mechanism is designed to discourage excessive reliance on physical cash, promote digital transactions, and increase financial transparency.
However, Mahere said the logic behind taxing cash withdrawals is fundamentally flawed, especially in an environment where Zimbabweans already grapple with some of the region’s highest bank charges. She directed her criticism at Finance Minister Mthuli Ncube, arguing that instead of encouraging digital migration, the policy would alienate consumers from the banking sector altogether.
“Why are you introducing a tax for withdrawing cash when bank charges are already so extortionate?” Mahere wrote. “Can you not see that you’re going to disincentivise use of the banking system?”
Her comments capture a wider frustration expressed by many Zimbabweans who say that the cost of maintaining a bank account – including monthly fees, swipe charges, ZIPIT fees, POS charges and sometimes even steep costs for card replacement – already eats into their incomes. In such a context, Mahere argued, adding yet another layer of charges could have the opposite effect of what the Treasury claims to seek.
Mahere Condemns Proposed Cash Withdrawal Tax, Cautions Against Banking Sector TurmoilX
She further noted that in functional economies, the act of banking is generally rewarded through interest accrual and stability, but in Zimbabwe, consumers often feel financially punished for attempting to formalise their transactions. High transaction charges, unpredictable policy shifts, and limited cash availability in banks have long contributed to public mistrust.
“Banking is supposed to offer interest, not penalties,” she wrote. “Yet here we are being charged simply for wanting to access our own money.”
Mahere also took aim at political elites, whom she accused of bypassing Zimbabwe’s banking system altogether. Without naming specific individuals, she suggested that affluent and well-connected figures operate heavily in cash, moving large sums outside the scrutiny of financial institutions. She pointed to frequent public displays of cash at political events, charity handouts, and rallies as evidence that some powerful individuals operate outside the system that ordinary citizens are expected to follow.
“We know that fat cats and political elites don’t bank money at all,” she said in the post. “Do you not see them dishing out piles of cash every day? You’re creating a haven for money laundering.”
Her remarks suggest that the proposed withdrawal levy could widen the gap between the powerful and the ordinary citizen: while formal-sector workers, civil servants and small-business owners would be forced to absorb extra charges, those with access to informal financial networks or unmonitored cash reserves would remain largely unaffected.
The government, however, maintains that the progressive tax is meant to reduce the dominance of cash in the economy and nudge people toward digital platforms, which authorities say are more secure and easier to monitor for illicit activities. Treasury officials argue that Zimbabwe’s high cash usage fuels parallel market currency trades, tax evasion and opaque financial flows.
But critics counter that digital adoption cannot be achieved through punitive measures alone. Many informal traders, rural communities and small-scale operators rely on cash because digital platforms often pose challenges — including inconsistent network coverage, high transaction fees, and the need for smartphones or POS machines that are beyond the reach of some users. There are also concerns about electricity cuts that can interrupt mobile money transactions.
Mahere’s critique has since touched off vigorous debate online, with commentators divided on whether the proposal will bring discipline to the financial system or impose new hardships on already struggling households. Some analysts say that if the levy is implemented without wider reforms — such as reducing bank charges, improving the reliability of digital systems, and addressing inflationary pressures — it may fail to achieve its purpose.
Others argue that a rushed move toward a cash-less society could place disproportionate strain on vulnerable groups, including pensioners, informal traders and rural residents who remain dependent on physical currency.
Mahere concluded her post with a message aimed at the broader political landscape: “We need new leaders,” she wrote, framing the taxation proposal as yet another example, in her view, of policymaking that is detached from the realities of everyday citizens.
Whether Treasury revises the proposal following public feedback remains to be seen, but for now, the cash withdrawal tax has added a new layer to Zimbabwe’s ongoing debates about economic policy, public trust, and the future of financial regulation.
Source- Byo24
