Zimra must think outside the box

Mr Pasi

Mr Pasi

Tafara Shumba
For the first quarter of the year, the Zimbabwe Revenue Authority (ZIMRA) collected US$834,6 million in revenue, against a target of US$817,9 million.
This represents a marginal excess of 2 percent, thanks to the heavy-handed approach that the revenue collection agency has taken to recover tax money owed to it by several companies.
Although the aggressive approach yielded positive results for ZIMRA, though negligible, there is a grave risk that the approach might soon work at cross purposes with the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (Zim-Asset).

The excessive garnishing of ailing companies leaves them on their knees.
While revenue targets are being met and exceeded, ZIMRA is shooting itself in the foot in the long run.
Most of these companies will close shop and that will spell a perennial dry fiscal season for ZIMRA.

Rock Foundation Medical Centre, which was an employer to hundreds of workers, closed down due to excessive demand of tax arrears.
The Civil Aviation Authority of Zimbabwe was recently garnished while several other companies have been given ultimatums to pay the arrears, some in excess of US$5 million, in just three months.

No firm operating in this harsh economic environment can remain on its feet after paying such colossal arrears.
Most of the arrears date back to 2009 and include heavy penalty and interest charges.

In all fairness, ZIMRA must tone down on its approach considering that it has been in a deep slumber since 2009 while the arrears were soaring to shocking magnitudes.

It is necessary for ZIMRA to work out a payment plan so as to avoid company closures and subsequent loss of employment, more so in the face of Zim-Asset which seeks to boost investment.

It makes a lot of sense to have small but sustainable amounts of revenue trickling in than making a once off killing.
They say half a loaf is better than none. Gershem Pasi, the Commissioner-General of ZIMRA, recently said: “We need to meet our targets, not just today, but as long as there is a nation called Zimbabwe.”

If ZIMRA does not scale down on its demand on tax, there will be no revenue tomorrow as the sources will soon dry up.
Some of the firms that ZIMRA is descending on are not absolute tax dodgers.

They have been conscientiously complying with the payment plans they agreed upon with the tax liaison officers stationed at ZIMRA.
It’s pathetic that some companies that have since folded, especially in Bulawayo, are selling equipment and machinery to pay tax arrears. In line with Zim-Asset, these companies could instead be recapitalised or granted tax amnesty as an incentive to boost their growth. It worked in South Africa.

In this unfavourable economic climate, it’s a fact that everybody owes somebody.
Even the Government itself is in arrears and to some extent it owes the very companies that ZIMRA is descending on.

ZIMRA itself is also mired in debt.
The economic challenges besetting our economy need extraordinary measures. Business as usual for ZIMRA will not work. Instead of squeezing the ailing companies that have at least resisted the economic downturn, ZIMRA must think outside the box and widen its tax collection base.

Capturing revenue contributions from the informal sector remains a talkshow. It seems Zimra has no capacity to monitor business transactions in this sector.
The informal sector accounts for 60 percent of all business and US$3 billion to US$7 billion is circulating in this sector.

If ZIMRA expeditiously targets this sector, it could tremendously expand its tax pool.
Some of those in the informal sector yield more than the ailing traditional firms but the taxman is doing nothing to bring this sector into the tax net.

We should begin to see the registration of all the informal sector businesses for easy follow-up on tax.
Most of the houses in Newlands, Eastlea, Belvedere, Milton Park, Avondale and Mt Pleasant, among others, have been turned into companies.
It is doubtful whether these small but thriving companies are remitting taxes.

It’s unfortunate that ZIMRA still heads for Graniteside, Msasa and other industrial sites when there are flourishing businesses in the residential areas.
In other countries like Canada, landlords pay tax on the profits they make from renting out houses.

There are some property magnates who collect monthly rentals which surpass the monthly turnover of some big companies. These people must pay tax, perhaps after deducting allowable expenses.

For countries like Ethiopia, a villager remits tax after selling even a goat.

Pin It
  • uMkhonto

    The government is its own worst enemy. The government is responsible for this mess.

    THE SOLUTION TO THIS MESS IS AS FOLLOWS;

    1. The government should stimulate investors into the country so as to open factories, companies for people to get employment. In turn these companies will pay tax to the government and hence be able to afford service delivery.

    2. The government should STOP SCARING AWAY INVESTORS. The government is shooting its own foot, and guess what, South Africa is benefiting from this. Now investors prefer South Africa over Zimbabwe. The government is indirectly campaining for investors to go to South Africa instead of Zimbabwe. Example, China build a huge complex to sell goods to Zimbabweans, but this complex was not build in Zimbabwe but rather in Mussina South Africa. The Chinese in Mussina are even enticing customers through speaking in Shona and Ndebele.

    3. South Africa is thriving because it does not scare investors. There are even many Zimbabwean investors in South Africa mainly because our government is scaring them with its contradicting policies. The Zim government tounge is forked like that of a reptile, it tells investor to come and voetsek (go) in the same breadth.

    4. The so called indegenisation policy is not unique to Zimbabwe, its also there in our neighbouring Botswana. The Zim government should ask itself this: Why is theindegenisation policy working nicely for the Botswana people while ours is SCARING INVESTORS. The Zim government should emulate DEBSWANA (a company partnership between DEBEERS and Botswana government).

    5. The Zim government should create an enabling working environment for business so as to maximise tax revenues.

    6. The Zim government should be open to constructive criticism.

    • tafamutekwe

      Quite true. Imagine the government is hostile to British investment because, according to their logic, Britain is our “bitter enemy.” Another area needing urgent redress is “the rule of law” whereby lawless marauders simply grub farmlands,conservancies and even companies and declare ownership.Other marauders collect revenue from public transport at Mbare Musika daily and they do not pay tax for their activities.Tafara Shumba’s analysis is spot on and whoever calculated the tax accumulated by Kereke’s Rock Foundation Medical Centre had the sole motive of bringing down the legislator but in the process a source of livelihood for hundreds of employees also went down the drain including a source of future revenue collection for the very ZIMRA. A classic case of shooting oneself on the foot.

  • chinos

    I did not have to read the full article but i am disappointed that there are other people who are condoning non remittance of government dues thus stealing from the people. ZIMRA just like any other law enforcement agencies should apply the Zim laws without fear or favour. In some countries, the likes of Uli Hoenness in Germany, Wesley Snipes in USA, were jailed for tax evasion and in Spain, Lionel Messi was charged and acquitted for tax evasion and for a country like ours which is desparate need for funds and needs all hands on deck to root out corruption should never, never let tax evaders go free. Once you let others walk away, where will you draw the line when those who were paying starting defaulting. It is this habit of letting offences go unpunished for a period such that they become part of life and then people start operations and when people resist, you have problems even with the public perception of the operation. Those who are failing to pay tax should just follow procedures than to be hunted down.

  • Sadombo

    ZIMRA garnish those unscrupulous businesses without fear or favour. Tax evasion is a criminal offence

  • Dziva

    And pass on the baton to someone who will think outside the grey hair !

  • Observer

    I am glad somebody has had the courage to expose ZIMRA for what it is.A bunch of extortionists who use the law to kill businesses.I am one of their victims.ZIMRA workers get bonuses 4 times a year when they “meet” revenue targets.They end up disallowing legitimate expenditure and raising ridiculous assesments and penalties.Their policy is pay before we entertain appeals.Sooner or later the geese which lay eggs will be dead.After that it will be door to door confiscating household goods if you have no receipts,mark my words.Of course bribery solves most problems but the state does not get the money.