adminPresenting the 2013 national budget last week, Finance Minister Tendai Biti announced that the country had this year missed revenue collection target by a cumulative $314 million in the first nine months to September based on the revised budget.
The participants said Minister Biti in the 2013 national budget statement should have considered taxing the informal business severely as the sector is the backbone of Zimbabwe’s economy.
They said this was also evidenced by the sector’s ability to sustain the national economy during the economic meltdown in recent years.
Ernst & Young tax manager Mr Peter Mgodi said because it is difficult for tax authorities to collect tax from the informal sector, the businesses were required to pay 10 percent presumptive tax.
He said the percentage of presumptive tax levied on the informal sector was inadequate.
“While it is difficult to collect tax from the informal sector, tax administrators should look for measures to harness the sector, and that is the trend everywhere because the informal sector is the backbone of the economy,” he said.
He said the introduction of a multicurrency system in February 2009 meant that businesses capitalisation levels were starting from a zero base.
“It is unavoidable that Government has got to collect revenue and this is why Government is taxing individuals. The informal sector is the industry in Zimbabwe, but we do not see the tax administrators seriously and vigorously taxing the sector. I believe revenue administration is not being done properly,” he said.
“How is the informal business contributing to revenue collection in the country?”
On tax-free threshold, Mr Mgodi said, if the Minister in next year’s budget had set the tax free bracket at the Poverty Datum Line (PDL), which presently stands at $568, it could have been fair.
He said Zimbabwe revenue perform-ance was poor because mining and agriculture, which were key economic sectors, were exporting raw products.
Mr Mgodi also said in the 2013 national budget Minister Biti announced that corruption by tax administrators at the border posts was rampant.
He said, however, the Minister did not elaborate the measures Government was putting in place to address the challenge.
The Bulawayo Miners’ Association secretary-general Mr Charles Chiponda said the informal sector kept the country going even during the period of economic meltdown.
“For example, during the times of economic hardships in the country few years back, we saw the people in the informal sector bringing fuel and food into the country, this literally means there is money in the sector,” he said.
A representative of Stratways Management Consultancy, Mr Lenox Mhlanga, said the Government should reduce corporate tax.
“Why not first prioritise capacitating the formal industry. At the moment industry is suffering from punitive policies by the Zimbabwe Revenue Authority. I would have thought that Minister Biti will consider reducing corporate tax companies are paying. And probably award tax holidays for industries that demonstrate they are growing and recovering from a crisis situation,” he said.
An economic commentator Dr Eric Bloch described the 2013 fiscal policy statement as a non-event although Minister Biti in his presentation managed to capture the negatives prevailing in the economy.
“To me this budget was a non-event, although the Finance Minister is commendable for realising some negatives prevailing in the economy,” he said.
He said Minister Biti did not do much in the budget to facilitate trade, adding that the ordinary people, a majority of them whose salaries were below the poverty datum line, continued to be taxed.
“The PDL is approximately at $570. The tax free threshold should be raised to $300 and not $250 and if we do not do that, it means we will continue taxing from the poverty stricken people,” he said. He said in February 2009, Govern-ment identified 40 000 ghost workers and only 6 000 had so far been eliminated.
Dr Bloch said the 2013 national budget had also not focused on creating a level playing field between the local and foreign industry due to unfair competition.
Solusi University faculty of Business Dean Mr Bongani Ngwenya said the 2013 fiscal statement was a mere incremental budget. He said there was no developmental aspect in the budget.
“The focus of the budget was supposed to be on the developmental side of economic infrastructure. I am not seeing any development effort in that budget except that it is an incremental budget of $200 million from the previous one,” he said.
Online Reporter