Business calls for review of taxes

Business Correspondent
BUSINESS analysts have called for the review of taxes and various cutback measures on Government fiscal expenditure ahead of the 2015 mid-term fiscal policy review to be announced soon by the Minister of Finance and Economic Development, Cde Patrick Chinamasa.

Economist, Mr Kipson Gundani, said Cde Chinamasa should embrace economic rationality to avoid making the fiscal policy an insufficient tool.

“The mid-term fiscal policy review should focus on cutting recurrent expenditure which currently gobbles 90 percent of the Budget, leaving little scope to venture in other economic turnaround strategies,” said Mr Gundani.

On taxation, Mr Gundani said Zimbabwe was one of the most taxed nations in sub-Saharan Africa and he called for a review of the country’s sundry taxes and levies. He said the taxes were increasing the cost of doing business.

He said under normal circumstances a tax reprieve was needed to cushion industry, but it was not possible so a downward review of levies was necessary.

“Stringent measures will be our only way out of our economic doldrums and that is what we are looking forward to see when Mr Chinamasa presents the mid-term fiscal review,” said Mr Gundani.

Zimbabwe National Chamber of Commerce national president, Mr Davison Norupiri, said it would be important for Cde Chinamasa to focus on policies to support emerging economies and Small to Medium Enterprises.

“Most large-scale companies incurred a lot of debt when we dollarised due to high interest rates on bank loans which ranged between 40-45 percent, so they are struggling to regain competitiveness at the moment.

“However, there are the emerging economies which need support and the SMEs as well especially on reducing cost of doing business in view of sundry levies being charged,” said Mr Norupiri.

He also concurred that the threshold on tax had to be revised.

“ZNCC is actually working on a paper to lobby for the scrapping of tax when private sector is dealing with Government institutions and parastatals . . .

“Presumptive tax and the tax charged on people sending money from the Diaspora, all these need to be reviewed to foster economic growth,” he said.

Buy Zimbabwe chief executive officer, Mr Munyaradzi Hwengwere, said Government should tighten local procurement laws and take the lead to foster economic growth.

In agriculture, Mr Hwengwere said there was a lot of dormant value which must be unlocked.

“Rapport of our policies is very critical because at the moment we have too many siphons and loopholes which are making the business operating environment very complex,” said Mr Hwengwere.

Confederation of Zimbabwe Industries Manicaland chairman, Mr Richard Chiwandire, said there was need to address the issues of company closures leaving thousands jobless.

“The increased taxes force businesses to restructure and this will put more people on the street. The employer will look at the weaker point which is the workforce, a situation which is not good at all,” Mr Chiwandire said.

Africa University lecturer and economist, Mr Thomas Masese, said Cde Chinamasa may have to revise his budget downwards due to depressed revenue collection.

He concurred with others that the cost of doing business was still hostile due to high sundry levies.

He, however, commended Government for continued efforts to re-engage the international community to attract Foreign Direct Investment.

“The fiscal review should buttress debt clearance mechanisms to unlock new financing for the country from multilateral funders.

“It should also come up with measures to stop continued company closures although on a case to case basis,” said Mr Masese.

Cde Chinamasa is expected to announce the 2015 mid-term fiscal policy statement on July 30 to weigh the macro-economic environment pressures and assess how the $4,1 billion 2015 national Budget is achieving its targets against a projected revenue collection of $3,7 billion.

The mid-term fiscal policy is also expected to assess the impact of Government’s taxation policies introduced in the 2015 national Budget and come up with economic turnaround measures for the second half of the year.

The country’s projected 3,2 percent economic growth target for 2015 will be another key aspect that will be under review.