In July 2009, the consultants carrying out a mid-term review of the Zimbabwe 2006-2010 National HIV and AIDS Strategic Plan recommended that the low level of funding for HIV/AIDS be improved by obtaining part of the money from value added taxation (VAT), a sales tax.

“The pandemic (HIV/AIDS) affected people from all walks of life and therefore everyone should make a contribution through the Value Added Tax system, rather than rely on individuals in formal employment and the corporate sector,” the consultants’ team leader suggested.

The AIDS levy introduced in 1999 to compensate for declining donor support consists of a three percent tax deducted from the salaries of formally employed workers and companies, but low salaries and the poor performance of industry have meant that not enough money has been collected.

Japhet Moyo, acting secretary-general of the Zimbabwe Congress of Trade Unions (ZCTU), said only 10 percent of Zimbabweans were formally employed. If the new plan was adopted, most people in informal employment ‘€” an offshoot of an economy that has languished in the doldrums for about 10 years ‘€” would also contribute.

The National AIDS Council (NAC) has indicated that it would soon present proposals to the government on how to administer the revenue from the VAT system.

Joyce Siveregi, of the Zimbabwe AIDS Network (ZAN), acknowledged that it would be a “good idea to widen the resource base” of the AIDS fund by including those in the informal sector.

The plan is not without drawbacks. “Taxation levels in this country are already too high … that could have an adverse effect on the general population, considering that the proposal to get extra funding through the VAT system could adversely affect prices,” Siveregi told IRIN/PlusNews.

Crippling hyperinflation rendered the Zimbabwe dollar all but worthless in 2009, but the introduction of foreign currency in its place reined in  inflation. If the VAT system pushed prices up, HIV-positive Zimbabweans would struggle to access medication and food, Siveregi cautioned.

Erich Bloch, an economist based in Bulawayo, Zimbabwe’s second city, told IRIN/PlusNews: “The introduction of an AIDS levy through the VAT system might actually make life harder for many people, considering that the economy is not performing well.”

He noted that “There is no guarantee that the fund will not be abused, and the solution is to boost the economy to broaden the tax collection base without sacrificing the poor majority.”

NAC is responsible for the AIDS levy, and has already come under fire for failing to use the fund to improve the welfare of people living with HIV. Reports in the local media in 2009 alleged that most of the money was being spent on salaries and perks.

The government body charged with coordinating anti-AIDS efforts collected about US$1.7 million since February 2009, but spent only US$20,000 on antiretroviral medication, prompting HIV/AIDS activists to call for a financial audit.

The allegations came a few months after the Global Fund to Fight AIDS, Tuberculosis and Malaria replaced the NAC as the principal recipient of grants, after the Reserve Bank of Zimbabwe (RBZ) diverted more than US$7 million of Global Fund money, which they later returned.

This feature is used with permission from IRIN/PlusNews  –  www.plusnews.org