adminTHE economic situation prevailing in the country is one where companies, families or individuals rarely have extra money to save or rather donate. Almost everyone is operating on survival mode – more like ensuring that the family or rather the business can survive within that short period.
Most if not all have hanging debts that are proving difficult to settle. That is why individuals and companies are losing property in auctions after failing to settle debts.
There are rarely long term plans and if they are there most of them are only on paper because of the general shortage of money – some want to call it the liquidity crunch.
This is even evident at Government level, with most ministries reporting that they received less than half of what they were allocated during the national budget, almost half way through the year.
At Government level, this has put pressure on the Ministry of Finance to look for more money to bridge this gap. The ministry has also simply passed the pressure to the tax collector – Zimbabwe Revenue Authority – to seek the money.
The evidence of the pressure is now there as Zimra is firing from every corner to raise the money needed to fund Government operations.
From big companies to the smallest, just mentioning the word Zimra sends shivers down the spines of the directors.
Many companies have had their accounts garnished while for the small companies, some of them have decided to adopt a hide and seek strategy to avoid the taxman.
One of the most affected sectors is the Small and Medium Enterprises, a sector seen as the biggest survival platform for many people.
In fact the official line from Government is that more than five million, nearly half of the country’s population, is surviving from the sector.
Most of these are relatively small family businesses set up to provide extra income to families who are either failing to survive from the little salaries or those that were retrenched from the many company closures that the country has witnessed over the past year.
Most of them do not employ qualified personnel to run these business and rely on children and relatives.
As such very few understand the need to regularise operations and in the process start paying other costs such as taxes.
What matters to them is to look for the stock to keep the business running and raise a little profit to replenish the stocks while the extra is then used to feed the family and meet other immediate obligations.
Tax is, however, not one of the obligations. In fact many do not understand why they must pay tax.
To them this is just an animal that comes to reap where it did not sow. Zimra is seen as a heartless organisation always coming in to chop the little profits that they are raising in order to survive.
To some extent they are justified. In some countries the tax collector rarely bothers these small companies, in fact tax collected is used to support these small businesses to grow.
Government will only take a look after the small business have grown to become big companies of which under such conditions they will definitely mature as they will be supported and not being mandated to cut their small profits they must use to expand operations.
The tax man will be busy with big companies as they try to monitor whether the super profits are being ploughed back to the country’s development.
After all these big conglomerates make huge profits some of which are externalised by shareholders.
But in Zimbabwe because of the situation the Government through Zimra has found itself scratching everywhere including these small businesses.
It is now a dog eat dog situation. Zimra wants these SMEs to regularise operations and pay taxes in the same way big companies are.
But the SMEs argue that they are small and still trying to find their feet and must be given a reprieve on tax.
They also argue that Zimra is being unfair by using intimidatory tactics to force the companies to pay tax.
The SMEs say if they approach Zimra trying to negotiate payment and how they can contribute, the organisation uses this opportunity as a way of spying on the organisation and then pounces later.
It is time these two important groups come together for the better of the country. It will not be worth it to destroy an industry supporting half of the population at a time when the big companies are closing.
For in most instances some of the SMEs have been forced to close fearing Zimra. In some cases they have moved from established places into the streets fearing the same organisation. Businesses such as salons have moved to backyards in residential areas for fear of Zimra.
This does not encourage growth but actually breeds businesses that never want to formalise their operations.
If Zimra wants to collect taxes from the sector, well it’s their mandate but they must do it in a way that does not kill the goose before the eggs are laid.
Zimra might think they are carrying their mandate to collect money from these small businesses but they must also sit down and carry out a research whether what they are doing is contributing to growth or death of this important sector.
Obvious there is a need for more consultations on this matter and come up with a win-win situation.
Government too must come in and ensure that these parties have an amicable understanding.
Of course it is a huge advantage that Government has now said at least 25 percent of their tender are now being reserved for SMEs. However the catch still remains that these SMEs must be registered.
Instead of seeing this as a plain way of uplifting them some SMEs might view this as a trap to get them into the Zimra web.
Registering and regularising operations is the way but Government must also protect these small businesses to ensure that they don’t end up losing everything they have worked for.
Online Reporter