Editorial Comment: Take not the foot off the pedal

GOVERNMENT revenue for the first eight months of the year shows that Treasury missed its collection target, affected mostly by the under-performance of the customs duty, corporate tax and Value Added Tax.
The failure to meet the revenue targets is a cause for concern as it would compromise the quality of Government interventions in key social service sectors such as health and education.

This seems, however, to be an indicative picture of the bigger problems in the economy; which begs the question, who is watching the economy? It might show that we have removed our foot from the pedal, allowing structural problems that decimated half Zimbabwe’s Gross Domestic Product in the decade to 2008.

There definitely is need to boost Treasury’s tax collection drive, but this must be done without necessarily killing the goose that lays the golden egg.

It must be pointed out, however, that the decline in revenue collection targets may indicate either relaxation on the part of the tax collector or more likely, the ever declining tax revenue base.

The cause of this could be two fold, growing challenges in industry or company viability, which compromises capacity to pay tax and the impact of measures the Government has taken to protect local producers, which has slowed down collections from imports.

Policy interventions should, however, have a positive causal effect around the economy, especially regarding to its effectiveness in helping the recovery of industry, although this may, in one way or the other, have weighed on performance of some revenue heads.

Whatever the cause of the decline in inflows to the Treasury, the bottom line is that concerted efforts need to be directed at measures to stymie the deteriorating situation in industry, which will maintain or increase corporate tax and individual tax revenue.

The biggest challenge industry faces is access to affordable long term finance and the Government needs to work extra hard to either open floodgates to sources of funding for retooling, provide guarantee for access to asset financing or create an environment that is conducive for unhindered inflow of foreign investment.

The challenges, Government face are huge, but certainly nowhere close to being insurmountable considering the potential Zimbabwe possesses due to the diversity of its economy and rich skills base holding its own in a competitive global environment.

It therefore follows that we must never take the foot off the pedal nor lose sight of the herculean task confronting, Government, private sector and every stakeholder in the country.

Now that we have failed to meet the targets, what’s next? How do we intend to ensure that going forward we will be back on track in terms of revenue collection?

Instinctively, of course, it means the Government will need to tighten revenue collection to prevent and potential leakages, especially regarding imports that evade paying tax at ports of entry. Reports suggest that leakages are rampant and at this juncture, this is a luxury that Treasury and the Government ill afford.

It also follows that the Government will need to prioritise resource application to ensure that strategic programmes of Government are kept alive while efficiency and results based management have never been more important to ensure the best possible results.

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