Home Business Fuel Salaries Hit The Market.

Fuel Salaries Hit The Market.

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These days innovation is the mother of necessity and it seems Zimbabweans have it in abundance.

The reality of leaving in a country where dictates of markets and the law have often clashed has produced solutions and policy options that have left many confused.

The law says unless authorised to do so, all local companies and individuals must conduct business in the local currency. The informal market appears to have betted on ignoring the law and won.

This sector has chosen in the main to price its goods and services in USD or bond notes equivalent or highly inflated EcoCash rates. Instead of dying such practices seem to be spreading.

The formal sector does not have such liberties. For one there are easy to be targetted by law enforcement agencies and in any case, no sane company would want to engage in practices that make the work of its auditors and accountants complicated.

You really don’t want to cheat RBZ and yourself. Most companies have thus chosen to work within the dictates of the local currency. All they do, if they can get away with it, is to use the street rate instead of interbank rate in their costing and pricing.

However, payment of salaries has proven a headache for many local companies that are keen on retaining top talent while avoiding having to offer increases every month.

In seeking to deal with the challenge, some big companies have found an innovative way which also reduces their tax obligation as well as overall expense.

These companies have opted to give their employees USD denominated fuel coupons. An employee may, for instance, be given a gross taxable salary of 2000 RTGS dollars and 350 litres of fuel per month.

The use of fuel coupons is per discretion of the staff member. It is never stated explicitly that the fuel must be disposed off but understood that in a market where USD fuel is becoming in demand most of such fuel coupons will be sold at a discounted price to a market tired of waiting in long local currency fuel queues. 

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The money from the transaction is retained by the employee. N questions asked.

Companies have found a way of compensating their workforce in USD without having to part with PAYE. In fact, they even make such ‘salaries’ a deductible expense.

The employee is happy albeit they must do a bit of work to dispose the fuel coupons. The losers and cheated are Zimra RBZ and dear Zimbabwe.

The downside is that without meaning to do so companies are encouraging a spirit of entrepreneurship within their doorstep that might, in the long run, come to haunt them.

In seeking to sell fuel coupons employees will invent fake trips and errands that keep them from the office. Employees have also realised that they can gain more fuel coupons if they embark on imaginary trips.

To make matters worse not all employees have buyers and so some employees have created networks of selling on behalf of others.

The result is that unknowingly companies have created enterprises within enterprises. The formal command and control now co-exists with a different organisation with its own set of rules.

Sadly this is all done because the social contract between business, labour and government is irretrievably broken down. So each party seeks to do whatever it can to ensure its own survival. In the end, the nation suffers.    

What does it take to sort out this mess, we want to hear your views on Great Dyke News24.

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