Online Reporter
It has taken quite some time for authorities to act on the high tax and regulatory framework for businesses to legally register and operate in the country, but we are encouraged that work to address that is now underway.
We were concerned recently to hear that, for a supermarket to be deemed legally operational, it has to secure and maintain more than 30 licences and permits from multiple regulatory authorities. Also burdened are the hospitality, mining and public transport sectors.
The huge tax and compliance requirements discouraged investment. Also, formalising the informal sector in that environment is difficult.
Encouragingly, however, President Mnangagwa has ordered a review of the country’s tax and regulatory regimes with an express view to easing them to make the country really open for business.
Finance, Economic Development and Investment Promotion Minister, Professor Mthuli Ncube told the latest issue of our sister paper, The Sunday Mail, that the revision is underway with a substantive position likely by August.
“We will streamline the taxes; we will cut out some of them; we will reduce the number of steps required to set up and run a business; and reduce the number of licences,” he said.
“We are aware that in some countries in the region, businesses require about half the number of licences we do. A good target would be to cut the number of regulatory licences needed to start a business by half. If we can achieve that — halving the number of steps and halving the cost of doing business — that would be a good target and that is a target that we are aiming for.”
This must be good news for local businesses that, although the review is coming quite late, it is now on the way.
We appreciate that a tough discussion is ongoing among the various ministries and government agencies and local authorities to reach agreements on which tax or regulation to scrap, reduce or maintain and which one not to and why.
As mentioned, reaching a settlement on these various matters and across various agencies and ministries is not going to be easy but a settlement must just be reached.
This means some ministries, government agencies or local authorities will have to agree to losing certain powers and revenues or portions thereof. Unfortunate for them, but we are confident that the wider economy will benefit if the taxes and regulations impeding business are streamlined.
Economies rarely thrive in an environment of multiple taxes and onerous regulations. Instead, an environment with fewer taxes and regulations tends to get businesses thriving.
Multiple studies show that China has prospered since 1978 because the Den Xiaoping’s administration of the time eliminated most of the taxes that were applicable at the time.
We learn from this Chinese experience that no country can tax and regulate itself to prosperity. A more relaxed, deregulated environment is what drives prosperity.
