BANKERS have urged Finance minister Mthuli Ncube to introduce sin-taxes to help grow the country’s revenue base.
In his presentation at a Parliament post-budget seminar on Monday, Bankers Association of Zimbabwe deputy chairperson Shanangurai Takaindisa said Ncube should introduce sweeping tax reviews that would include taxing churches and introduction of a wealth tax to increase revenues.
Takaindisa said more taxes on informal businesses such as presumptive tax must be introduced given that the economy is largely skewed towards the informal sector, hence the need to introduce informal taxes.
“For example, Ncube should tax corporates for not meeting their corporate social responsibilities,” Takaindisa said.
“Tax university grants, tax auction participants, tax churches (registration of these). If agriculture is largely exempt from most taxes, how do we get a dollar or two out of them? The other big question is: Are we collecting enough taxes? Have we exhausted all our sources? The key is to curb exemptions or find ways to tax them.”
Takaindisa said all tax collections should be invested with financial institutions to add to the revenue coffers instead of having funds that lie idle in the collecting account.
She welcomed the increase of excise duty on energy drinks from $0,05 to $0,10, saying actually, it should have been increased to $0,20.
On the restoration of the 15% value added tax (VAT), she said this would grow the revenue base.
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Economist Albert Makochekanwa poked holes into the 2023 National Budget saying there is need to address revenue leakages which continue to limit fiscal space.
“Tax administrative efficiencies and the implementation of numerous measures to increase tax compliance are anticipated to contribute significantly to the achievement of projected revenues in 2023, which will primarily consist of tax revenue of $3,5 trillion (16% of gross domestic product (GDP)) and non-tax revenue of $369,7 billion (1,7% of GDP). Nevertheless, there is a need to address revenue leakages which continue to limit the fiscal space,” Makochekanwa said.
He lamented that the bulk of Ncube’s $4,5 trillion 2023 budget will be gobbled by employment costs (52,4%).
“The increase in the employment cost level is on account of the need to cushion civil servants against the impact of global economic challenges and domestic price increases. However, greater employment cost expenditures result in diminished fiscal resources for the operational budgets of public service delivery institutions (hospitals with well-paid nurses, but no drugs, schools with well-paid teachers but no books or internet),” Ncube said while presenting the budget.
On health, which was allocated $475,7 billion (10,5% of the budget), Makochekanwa said amount remained grossly inadequate to fund the critical needs of that sector.
“The current health financing model remains unsustainable because it heavily relies on external financing as well as out-of-pocket spending,” he said.