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Presumptive tax threatens business

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KWEKWE – The Zimbabwe Driving Schools’ Association (ZDSA) has rapped Treasury for imposing a high presumptive tax on players in the informal sector, saying the blanket tax requirement was already driving them out of business as they were not generating much money.

BLESSED MHLANGA
STAFF REPORTER

ZDSA members recently petitioned Treasury and the Ministry of Transport to withdraw the tax, saying it had choked their businesses.

Part of the petition reads: “Business for driving schools has been on a free fall over the past years owing to the closure of major industries and the resultant high unemployment levels . . . we are further burdened through the payments of other statutory requirements which include licences to city councils, Traffic Safety Council of Zimbabwe and Zimbabwe National Roads Administration (Zinara).”

“Therefore a further burden of $500 per vehicle every quarter has the effect of forcing our members out of business and hundreds of employees will be left without jobs.”

ZDSA secretary Solomon Rwodo said most driving schools could not afford to sustain any further taxation from the government.

“We want our Minister (Obert Mpofu) to look into this matter with an open mind. The need to raise money for the government should not result in forced company closures. How can someone already operating at a loss pay $2 000 for each vehicle per year?” he said.

Rwodo said what was surprising was that government expected a small car like a Nissan March used for driving school business to pay $500 per quarter, but charging a bus $450 for the same period.

“Using common sense, do you think a Nissan March would make more business than a cross-border bus which carries 65 passengers?” he asked.

Government has also ordered hair salons to pay $1 500 presumptive tax to Treasury each quarter regardless of the size of the business.

Timmy Nyamunda, who operates a hair salon in Kwekwe, said he had no option, but to shut down his business following the introduction of the presumptive tax.

“We don’t even earn $1 500 in four months before paying rentals in this salon so I am not sure how government expects us to fund that tax,” he said.

Government, which of late has been struggling to meet its salary obligations, has hiked tax charges to avoid a backlash from the restive civil servants.

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