A TAX specialist says a single payment system is essential for the reduction of compliance costs to taxpayers.
BY TATIRA ZWINOIRA
A compliance cost is expenditure of time or money in conforming to government requirements such as legislation or regulation.
Speaking to NewsDay yesterday, tax specialist Tendai Mavima said a one-stop shop could reduce cost to business and therefore minimise compliance requirements.
“Yes, it is necessary. If we operate with multiple compliance requirements, this increases compliance costs on taxpayers. A one-stop shop will reduce costs to business and hence promote ease of doing business,” Mavima said.
“Imagine having to pay City of Harare licence, Zimbabwe Investment Authority licence, Immigration permit fees, motor vehicle licences at Zimbabwe National Roads Administration (Zinara).
“This could amount to a full day’s job whereas if this is centralised, it will only be a few hours if not a minute’s job.” Compliance with tax laws, such as income tax or sales tax legislation, is a common topic of political debate, primarily because these taxes affect the majority of citizens in society.
Compliance costs normally include all costs associated with obeying the law, including planning and administration, in addition to the direct time and money spent filing paperwork.
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A single payment system is also aimed at generating more revenue in an economy that has had underwhelming performance since dollarisation.
“Most measures in the 2016 budget were targeted at increasing revenue collection without considering that the taxpayers are already overburdened. Most tax costs are passed on to consumers and this may result in price increases,” Mavima said.
“In the prices are not increased, then the companies will bear the costs, resulting in reduced profits and reduced income tax payable to government.”
The idea behind a single payment system was also to help investors set up business by paying all the necessary monies needed to one institution, thereby halving the time it takes in setting up a business in order to increase investment.
The programme was initially started in September last year spearheaded by the Office of the President and Cabinet and supported by the World Bank.
