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Chief Secretary to the President and Cabinet Dr Misheck Sibanda addresses a workshop for heads of parastatals in Harare yesterday

Conrad Mwanawashe and Clara Mawere—
CABINET approved the remuneration policy framework to help impose taxes on the packages of heads of parastatals, state enterprises and local authorities after investigations conducted by the Zimbabwe Revenue Authority unearthed massive tax evasion, a senior Government official has said.
The Corporate Governance and Remuneration Policy Framework, which deals with ways to restore accountability and stamp out corruption in parastatals, was drafted recently, but had not come into effect because Cabinet had not yet approved it.

It was discovered that heads of parastatals were awarding themselves mega allowances that were not being taxed, while they offered their salaries, which were little compared to the other packages, for taxation.

Cabinet has also approved the establishment of a Corporate Governance and Delivery Agency in the Office of the President and Cabinet responsible for ensuring the heads comply with provisions of the remuneration policy framework.

Officially opening a Zimra workshop for parastatals and State enterprises yesterday, Chief Secretary to the President and Cabinet Dr Misheck Sibanda said Zimra discovered that public institutions were not complying with the country’s tax laws.

He said the workshop had been specifically called to remind heads of parastatals and State enterprises of their tax obligations.
“The investigations undertaken by Zimra on a number of State enterprises, parastatals and some local authorities have unearthed a number of irregularities in the areas of income tax, PAYE, withholding tax, among other tax heads,” said Dr Sibanda.

“Such revelations brought to the fore the need for an interactive forum where all chief executive officers of State enterprises, parastatals and local authorities can be enlightened on their tax obligations.”

Dr Sibanda said the situation where parastatals and local authorities operated as opaque and inward-looking entities that effectively reduced citizens to passive recipients of shoddy services could no longer be entertained.

“With specific reference to the public sector, I wish to advise that Cabinet has already approved the Corporate Governance and Remuneration Policy Framework for designated posts in State enterprises, parastatals and local authorities,” he said.

The measures, which have been approved by Cabinet, would result in Zimra collecting tax on total pay packages comprising basic salary, which is expected to be 60 percent and benefits at 40 percent, for designated posts in State enterprises, parastatals and local authorities.

Chief executive officers and heads of local authorities would be appointed for a four-year term, which is renewable once on the basis of satisfactory performance.
Some of the measures include that all heads of public institutions would be put on performance-based contracts, that the payment of bonuses also be performance-based and that the specific components of the benefits portion of the total pay package be determined by the relevant boards, with the concurrence of the specific line ministries.

Ministers with the assistance of heads of ministries would closely monitor the performance of public enterprises and local authorities under their purview.
Dr Sibanda called for a paradigm shift in how State companies operated.

“It is, therefore, incumbent upon heads of ministries to ensure that State enterprises, parastatals and, as the case may be, local authorities under their purview become more commercially viable, and that they do not continue to pose a drain on the fiscus,” he said.

“As we forge ahead with the implementation of the Zim-Asset plan, I urge you permanent secretaries, chief executive officers and heads of local authorities to pursue a culture of change in terms of the manner in which you discharge your responsibilities.”

Zimra commissioner general Gershem Pasi said some of the issues picked up by the authority’s audits included benefits for the top brass not being taxed.
He said even “in-kind benefits” should be quantified by accountants, attract a monetary value and have PAYE deducted, yet that was not happening in some instances.

“Sometimes there are cases where PAYE has been deducted, but not paid over either due to some lapses in the accounting systems or in a few cases blatant non-compliance,” said Mr Pasi.

Zim-Asset has a cluster-based development thrust which seeks to eliminate “compartmentalisation” among institutions in favour of promotion of synergistic relationships.

Cabinet has already resolved to look at all State enterprises and parastatals on a case by case basis, to ensure they are reformed and refocused to contribute significantly to the Gross Domestic Product.

The State enterprises have been asked to submit turnaround strategies for Cabinet’s consideration.