The MDC-T-dominated Masvingo City Council has landed itself in trouble with the Zimbabwe Revenue Authority (Zimra) after it failed to remit taxes for three years, resulting in a debt of $707 793, 98.
According to minutes of the council’s finance and general purposes committee, Zimra, which discovered the anomaly during an audit this year, is now demanding payment of the full amount plus a 40% interest charge.
Zimra also gave the local authority until next April to settle the bill or face punitive measures. Masvingo mayor, Alderman Femius Chakabuda, said the local authority had not evaded or avoided paying tax, but had been misled by a verbal directive by the then Finance minister, Samuel Mumbengegwi, that council workers’ allowances were exempted from taxation.
“The then Finance minister Samuel Mumbengegwi announced at a rally in Masvingo that all council workers were exempted from paying taxes on allowances. We implemented it forthwith pending written confirmation from the minister. We are not the only ones affected, but all the local authorities in the province,” Chakabuda said.
He said when Zimra officials carried out their routine audit, they demanded written confirmation, which never came from the then minister.
Council has since resolved to pay $15 000 a week to Zimra in a bid to beat the April 2012 deadline, although the finance committee felt the penalty was just too high.
“The interest that the principal charged of 40% is too high, hence the need to engage Zimra to reduce the same,” read part of the minutes.
Chakabuda said the local authority would recover the tax arrears from salaries and benefits of employees, both living and deceased, over a period of three years.
