Local authorities demand income tax share, 2% tax exemption

BY MTHANDAZO NYONI

LOCAL authorities have demanded that government should share with them the direct and indirect taxes it collects so they can contribute towards the attainment of vision 2030.

Presenting his paper at the ongoing Local Government Investment Conference in Bulawayo yesterday, Redcliff town clerk Gilson Chakauya said direct and indirect taxes collected by government were not being shared with local authorities even though some of the activities that generate the taxes are being carried out in areas under the jurisdiction of local authorities.

“Given this position, this paper will suggest that there should be some formula that can be used on tax sharing between the central government and local authorities,” Chakauya said.

Chakauya said government introduced 2% tax on electronic transactions and the only transactions which are exempted are those for central government and its departments.

“Local authorities are a lower tier of the central government and by taxing them the government will be taxing itself and this is tax on tax. Given this position it is suggested that a review of the application of the 2% tax on local authorities be made and local authorities be exempted from paying this tax,” he said.

Chakauya said both central government and local authorities should commit themselves to resource mobilisation on devolution.

Harare mayor Herbert Gomba weighed in, saying there was need for government to consider that because “our economy is highly informalised now and in most cases those in the informal sector are not able to pay through the traditional ways of paying to municipalities”.

“We would want to benefit from sales tax or income tax. It has to be clear. That’s the norm in other countries. We all agree that central government must get more, however, it must be recognised that we cannot use traditional modes of revenue collection to address contemporary problems,” Gomba said.

Gomba said most of their infrastructure had a 30 or 25-year gap in development or lack of investment; therefore, they needed to cover that through increased revenue collection.

“And that must be something that must be done in terms of devolution. We must get a percentage. If you can’t collect from a vendor, you must get to collect from the vendor when he goes into OK (supermarket) to buy and get something through sales tax and this must be done if we are to be able to attain the 2030 vision that was set by government because it is my belief that the functionality of a part, local authorities are all parts to Zimbabwe which is a whole and the functionality of a part to the whole also contributes to the functionality of the whole,” he said.

“In this case, the attainment of a vision 2030 is achieved only when the parts, which are local authorities, are able to transform themselves into world-class cities or into middle-class entities. It must be clear that revenue sharing entails reforming the taxation system in Zimbabwe.”

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