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THE Minister of Finance and Economic Development, Professor Mthuli Ncube, has said domestic resource mobilisation (DRM) must be the “lifeblood” of development as Zimbabwe looks beyond reliance on borrowing and donor support to finance provision of key services.
Speaking on the occasion of last week’s Zimbabwe Revenue Authority (Zimra) appreciation awards event, the minister said the need for an improved economy, social and infrastructural development must be driven by a sustainable DRM framework.
Generation and spending of domestically generated revenues, thus, must be the backbone of a shared prosperity within a country sustainable, he added.
“Domestic resource mobilisation is potentially the biggest source of long term financing for sustainable development and it is the lifeblood of the state governance such as the provision of public goods and services.
“It helps strengthen our fiscal position because stable and predictable revenue facilitates long-term fiscal planning, which can help ensure that resources are allocated to priority sectors and are translated into outcomes,” said Prof Ncube.
“Coupled with economic growth, DRM is the antidote to long-term aid dependency and it increases ownership and policy space to implement strategies that reflect development priorities.”
The minister said the time has come for Zimbabwe to stop covering budget deficit through borrowing. He said over-reliance on foreign aid flows can be very volatile and has the potential of affecting economic development and the accumulated debt will be costly to future generations.
“We, therefore, look forward to a ‘Zimbabwe beyond aid’ as espoused by the African Tax Agenda under the Addis Tax Initiative (ATI) towards the achievement of Sustainable Development Goals (SDG’s),” said the minister.
He said Zimra has the task of ensuring the country’s ability to self-sustain through generating adequate revenues domestically by collecting taxes and duties to finance public expenditure, both recurrent and capital expenditure.
Over 80 percent of Government expenditure is funded through revenue collections from Zimra.
The minister noted that through hard work and dedication, Zimra exceeded the set collection target for December 2017 and has sustained this success trend throughout the year 2018. He urged voluntary compliance and challenged tax payers, both businesses and individuals, to pay their fair share of taxes and duties to support long term development and cover the budget deficit.
“The success of our economy is dependent on the political and financial support that Zimra receives from the Government and business community in order to improve voluntary compliance,” said Prof Ncube.
He said the recently introduced Intermediated Financial Transactions Tax, also known as the two percent transaction tax and the removal of S.I.122, among other measures, were all at the heart of a wider recovery plan that must not be read in the short term but rather in the long term, with long-term returns.
“As Zimbabweans, it is imperative that we embrace the new Intermediary Money Transfer Tax of two cents and be prepared to go through temporarily turbulent times after, which we can stabilise our macro-economy.
“The tax is designed to broadly capture all economic activity/transactions — including the informal and shadow ones — raise revenue, close the fiscal deficit and restore confidence through low budget deficit and reduced domestic debt,” said the minister.
Treasury has warned that collecting PAYE, VAT and other Witholding Taxes on behalf of Government and converting it for own use was criminal and borders on economic sabotage.
Zimra is owed about $4,5 billion in tax arrears by businesses and individuals. As such Prof Ncube has said Zimra will adopt aggressive measures to recover the debts as Government cannot condone such criminal and destructive behaviour.
Prof Ncube also called on all Zimbabweans and potential investors to embrace the “Zimbabwe is Open for Business” mantra as a window of opportunity presented by the new political dispensation.
He said Government’s Vision 2030 was achievable hence key reforms were already being implemented under the “Transitional Stabilisation Programme” (TSP).
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