AAG yet to meet business organisations over tax exemption

Oliver Kazunga Acting Business Editor
THE Affirmative Action Group (AAG) says it is still in the process of trying to engage other business associations over the proposal to lobby the government to temporarily exempt struggling companies from remitting some taxes.The engagement is aimed at guaranteeing collective approach on matters hindering viability of local industries.

In 2013, the group announced plans to meet Finance and Economic Development Minister Patrick Chinamasa a few weeks after the presentation of the 2014 national budget to lobby government to give ailing firms a moratorium on tax to promote industrial recovery.

This year’s budget was presented on December 19. AAG national vice-president Sam Ncube said his organisation was yet to meet other business organisations on the matter.

“Others are dragging their feet and we know why this is so; it is because companies have just returned from the annual shut down and they need a little bit of time to reorganise themselves. As a lobby group, we believe businesses need to speak with one voice because a collective approach is always effective,”  he said.

AAG intends to meet organisations such as the Association for Business in Zimbabwe, Confederation of Zimbabwe Industries (CZI), and the Zimbabwe National Chamber of Commerce to request government to consider a moratorium on meeting tax obligations to the Zimbabwe Revenue Authority (Zimra).

The group has said it was receiving calls from businesses that they were behind in terms of meeting their statutory obligations like sales tax and Pay As You Earn resulting in them failing to renew their tax clearance certificates.

Last month, Zimra launched a tax blitz on businesses in Bulawayo imposing stiffer penalties on defaulters.  Due to liquidity constraints, antiquated machinery, power challenges and competition from cheap imports, local industries were struggling to stimulate productivity to competitive levels.

Before the adoption of a multi-currency system in February 2009, the country’s manufacturing sector was operating at an average of 10 percent capacity utilisation with government setting a target to achieve 60 percent capacity utilisation by the end of the same year.

However, the manufacturing sector, which requires an estimated $8 billion working capital, was yet to raise productivity to 60 percent. According to the CZI, the manufacturing sector last year recorded a 39,6 percent capacity utilisation compared to 44,6 percent in 2012.

The industrial representative body attributed the decline in capacity utilisation levels among other fundamentals to liquidity crunch in the economy, power challenges and obsolete equipment.