‘Zimra can raise over $8bn on increased tax compliance’

THE Zimbabwe Revenue Authority (Zimra) has potential to raise over $8 billion if it could achieve 100% tax compliance, over double the current rate, the Zimbabwe Coalition on Debt and Development (Zimcodd) has said.

BY MTHANDAZO NYONI

Zimra is currently at around 30% tax compliance, but has still to surpass tax revenue targets.

In its second quarter fact sheet, Zimcodd said Zimra’s tax revenues could more than double on tax compliance, holding economic growth and other variables constant.

“If Zimra is able to raise $2,411 billion at 30% tax compliance, it has the capacity to raise over $8 billion at 100% tax compliance. This is more than twice government expenditure for January to June 2018,” Zimcodd said.

“This would mean additional funding for public services and achieving a budget surplus. It implies that the country has the potential to mobilise resources domestically and finance its own development, and redistribute through the allocation at least 5% of the national revenues raised in any financial year to provinces and local authorities as provided for under section 301, subsection 3 of the Constitution of Zimbabwe.”

The organisation, which advocates for economic and social justice, noted that tax revenue collections exceeded the target by 21,84% and 15,09% during the first quarter and first half of 2018, respectively.

Zimra commissioner-general Faith Mazani says tax compliance in Zimbabwe is too low to support economic growth and has launched a campaign for voluntary compliance.

In a recent report, Zimra said that tax arrears increased from $3,93 billion at the beginning of the year to $4,227 billion by end of March, including unremitted value-added tax, half of which comprise penalties and interests.

Mazani said the authority had extended the six-month tax amnesty granted by government to tax defaulters, which lapsed on June 30, 2018.

The amnesty waived penalties and interest and will be rolled over, but only for those who voluntarily owned up and settled their accounts.

Zimcodd argues that government’s failure to play its role in service delivery was one of the reasons driving down tax compliance.

“One would then wonder how Zimra is not only exceeding 2018 revenue targets, but rather surpassing 2017 figures. In an economy which is highly informal, the 300 000 registered tax payers is an underestimation,” Zimcodd said.

“The scenario given by the Zimbabwe Revenue Authority implies that the unregistered small businesses and individuals are bearing the tax burden.”

Zimcodd has urged Zimra to develop a simple and broad-based income tax system favourable for Zimbabwe based on both self-assessment system and official assessment in the medium to long term.

“In the short-term, Zimra should employ innovative measures of recovering the tax debt in addition to the ongoing window period for voluntary disclosure, notwithstanding the expiry of the amnesty on 30 June 2018,” Zimcodd said.

It also recommended that punitive measures for discouraging future defaulters be developed simultaneously.

“This will compliment current efforts of rewarding tax compliant companies. The government should honour the social contract and develop clear accountability mechanism for the citizens in order to increase tax compliance,” Zimcodd said.

The organisation also wants Zimra to upscale its efforts to expand the tax base by reducing tax incentives given to multinational corporations as well as find innovative and progressive ways to rope in the informal sector.

5 Comments

  1. iyo tax yemari yemu mhepo

  2. Zimbabweans in the informal sector don’t want to pay taxes. The finance minster should have gone with 5 cents per dollar instead of 2.

  3. Tax money is not revenue …rather its draining the marginalised small buSsiness and individuals hence we keep our self static…we need production …FDI and building investor confidence

  4. we don’t need more taxes, we are already over taxed by regional and international standards. For example, The average personal income tax in Botswana is 25%, but for us 25% is essentially where we start! by the time your income is a 1000 bond notes, government takes 40%. not to mention other levies and deductions, and lets not forget the “noble” idea of an additional cancer levy which government is considering. Now you dont need a PHD in economics to know that a high and punitive tax regime militates against the foreign investment which the country needs. It’s self sabotage. Further more, with the bloated wage bill, poor fiscal disciple and rampant corruption, any additional revenue will not go very far until these issues are effectively addressed. It will only overburden the already overburdened tax payer. I, with all due respect, think our government should rethink this “spur of the moment” move, which has evidently been made without much consultation.

  5. I will never comply with tax when the govt continue to be reckless and loot like they do. It’s simple the moment i see the money doing something i will pay. All the tax is being squandered.

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