Zimra automation now urgent

heads to mobilise US$3,6 billion for this year’s Budget and will have to collect an additional US$3,8 billion for the 2013 Budget.
Given the underperformance of most revenue sources in the first half of the year and the marginal positive variance between targeted inflows and actual collections in the third quarter, Zimra will need to improve its revenue collection capacity.
The need to fund the automation of Zimra was particularly highlighted following revelations that it was facing challenges in tapping revenue that was being generated through cyber purchases.
This was said to be the case because the revenue collector’s systems are not able to monitor exchange of money through the internet.
Zimra is, however, now undertaking an automation process to improve its capacities, but the Government has been unable to commit adequate funding to ensure the process is completed expeditiously.
In the Mid-Term Fiscal Policy Review Statement, Finance Minister Tendai Biti said that the national resource envelope was squeezed for cash to release in a single tranche the US$32 million needed hence the automation would be implemented in phases.
However, the protracted automation of Zimra’s systems means it will take longer than anticipated for the country to significantly improvement its collection capacities and so fiscal pressures are set to continue.
Already, due to limited revenue collection capacity, salaries for State workers gobble more than 70 percent of budgeted funds and that has crowded out other important State funded programmes.
At mid-year, Minister Biti revised downwards his initial US$4 billion revenue collection target for the 2012 National Budget to US$3,6 billion as anticipated revenue did not come through as projected.
Given the 2013 National Budget will have an additional US$200 million any knocks on the economic performance and static revenue growth would result in serious funding constraints for Government.
Zimra has to collect the budgeted funds or else Government would have to find ways to bridge the gap, a difficult task considering the donor community has not been willing to help Zimbabwe.
Third quarter revenue collection figures show net inflows recorded slight positive variance of 0,1 percent, which is hardly encouraging considering anticipated limited inflows from diamonds due to meddling in the sale of the country’s gems by western countries.
The revenue collections for this quarter amounted to US$823,4 billion against a target of US$822,6 million, marginally exceeding target.
Observers contend that the Government could still miss the revised revenue target of US$3,6 billion. At this point the gap between the cumulative tax revenue and targeted inflows is US$1,3 billion. In terms of the respective tax heads, figures show that the Customs Duty revenue head recorded a negative variance of 8 percent from collections amounting to US$89,4 million against a target of US$97,6 million.
There has been some decline in import levels as a result of an improvement in local capacity utilisation.
Tax on dividends and interests, capital gains tax and capital gains withholding tax, tobacco levy and other indirect taxes recorded a negative variance of one percent.
Low liquidity levels have affected the local bourse resulting in low collections from capital gains withholding tax.
Low activity in the mortgage sector has also negatively affected performance of related revenue heads. Value Added Tax and individual tax have, however, continued to dominate the revenue collections contributing 34 percent and 21 percent respectively to the total revenue collected in the third quarter.
Cumulatively, total revenue collections at the end of the third quarter were US$2,318 billion against a target of US$2,323 billion, resulting in a negative variance of 0,19 percent thus far this year. As such, Treasury will need to come up with strategies to increase revenue collections and be able to announce a 2013 Budget that addresses the concerns of groups such as civil servants.