Transparency International Zimbabwe (TIZ) has urged the Zimbabwe Revenue Authority (Zimra) to adopt new technology in tax administration like the use of tax software and create easier-to-use online portals to simplify compliance and eliminate corruption.
BY MTHANDAZO NYONI
In its latest survey report, TIZ said there was inefficient tax administration in the country, leading to tax evasion and corruption.
To address that, TIZ said the taxman should adopt new technology in tax administration.
“Technology is changing how taxes are administered given the fourth industrial revolution. According to the World Bank 2020 Doing business report, an increasing number of companies are using tax software, and more tax authorities are creating easier-to-use online portals to simplify tax compliance,” the report read in part.
“Electronic systems for filing and paying taxes benefit taxpayers by reducing preparation time and errors by enabling automated verification of transactions. Additionally, a system for auditing computerised systems should be implemented to detect fraudulent changes to programmes or files,” it said.
TIZ said such systems also benefit tax authorities by making the tax systems more robust and reduce operational costs such as those associated with processing and handling paper tax returns, thus allowing human and financial resources to be reallocated to efforts that improve services to taxpayers.
“The efficiency with which tax revenue is converted into public goods and services has an impact on the tax morale of businesses and individuals,” it said.
As part of its findings, TIZ said the economic environment as characterised by poverty, inflation and economic volatility was regarded as the major cause of corruption in tax administration.
Given the challenging macroeconomic environment and highly informalised economy, worsened by increasing poverty most economic players (individual and private business) are in a survivalist mode, it said.
“It is generally accepted that as the size of the informal economy grows at the expense of the official economy, the government’s tax revenue base is further eroded. The higher the levels of informalisation, the greater the tendencies for business operations to go under the tax radar and the higher the prevalence of corruption, as small businesses and other informal economy operators evade paying taxes which they regard as proportionately too high for business viability,” TIZ said.
Respondents stated that they were of the view that political leadership sustained and often created and protected corruption. They indicated that the impunity afforded to politically connected persons and the elites has resulted in the spread of corruption even at lower levels.
“The overall result has been the weakening of voluntary tax compliance. A case in point was the controversial case of the importation of Isuzu vehicles worth more than US$8 million by the ruling party,” it said.
Some respondents believed that even when officials are arrested, the lack of stiffer penalties as stipulated in Zimbabwe’s anti-corruption laws makes taxpayers prone to exploitation.
“Low wages was also cited as one of the drivers of corruption in tax administration. Employees are forced to engage in corrupt activities such as bribes and extortion to supplement their wages and salaries,” it said.
Small business operators and those within the informal economy bemoaned high tax levels as one of the push factors driving them to offer bribes for their goods to pass through the official system through tax evasion.
“Citizens’ lack of knowledge on the roles, functions, duties of public officials, including anti-corruption strategies by responsible tax administration institutions, has resulted in an increase in corrupt behaviour by tax officials. For example, only a few respondents had knowledge of Zimra’s zero-tolerance policy,” it reads.
TIZ also said to eliminate corruption in Zimbabwe’s tax administration, there was a need to provide a living wage for tax officials, further simplification of the tax system, enhance co-operation by Zimbabwe’s political leadership and ethical leadership in prosecuting tax offenders or tax-corrupt officials as well as application of stiffer penalties on corruption in tax administration.
It also said there was need to speed up the adoption of a whistleblowing legislation to protect those who blow the whistle on corruption in tax administration.