Govt urged to speed up informal sector development

Tinashe Makichi : Business Reporter

The Zimbabwe Coalition on Debt and Development has implored Government to accelerate infrastructural development for informal trade in the country in order to ensure consistent generation of revenue for the fiscus. In a statement yesterday, the non-governmental organisation said efforts to formalise the informal sector must come to the fore rather than focusing on just taxing the sector.According to the FinScope Medium and Small Scale Enterprises Survey 2012 Report for Zimbabwe, 65 percent of the informal sector was estimated to have a turnover of around $7,4 billion.

“There is need to promote and support infrastructural development for the informal trade in order to generate revenue for the country. Issues to formalise the informal sector must come to the fore rather than just taxing the sector.

“By supporting and not stifling the sector, the Government will be able to build the trust of the sector in the country’s systems.

“The informal players also need to be consulted by the Government for any policy measure to be taken and this will encourage them to bank their money thereby contributing through voluntary taxation,” said ZIMCODD.

“While the sector has been filling the gap left by big corporations in providing goods and services as well as employment, this is not true with regards to tax contributions hence the country is losing out a lot of potential revenue.”

India and China are good examples of countries with the largest number of SMEs in the world with the sector accounting for 40 percent of India’s labour force and the government provides the necessary support to the sector.

ZIMCODD said efforts to better understand the profile and perceptions of small traders can help to engage them and establish a dialogue on tax issues thereby contributing to a “culture of tax compliance”.

Government was advised to extend technical support to the informal sector as merely taxing them without the necessary support will result in the suffocation and subsequent extermination of the sector.

The NGO said there is need for the simplification of the compliance and registration systems so that this becomes less burdensome to the new taxpayers.