The Sunday News
Economic Focus
IT is somehow saddening that Zimbabwe’s number one fiscal institution — the Zimbabwe Revenue Authority — has remained tight-lipped on what it intends on doing with the non-remitting taxpayers in this multi-currency regime. No doubt Zimbabwe has many unbanked taxpayers but that does not mean that they should not remit taxes.
The apparent answer to this question seems rather too obvious; that Zimra would simply send auditors, garnishee and penalise any non-complying individuals and corporates. This approach seems rather too simplistic for Zimbabwe’s complex fiscal and economic problems. Many have read and understood the prescripts of Zim Asset but what are we to expect from this vital institution with regards to one’s tax affairs?
One scholar aptly described a tax as a compulsory levy by Government on earnings of individuals, firms or communities that enable Government to perform all its duties to its citizenry.
However, latest research suggests that Zimra has continued to hound the same geese that have been laying the golden eggs.
Trends have shown that the remitting few have continually been taxed and it is this development that has seen Zimra shift the focus from the remitting companies to the owners of those companies in what they dubbed “lifestyle audits”.
I do not condone tax evasion, but Zimra should come up with tangible solutions as to how to increase its revenue without destroying the economic benefits that have been derived thus far. No doubt that a penalty equivalent to 100 percent of the assessed liability is a good deterrent but how it is to be recovered is somehow worrisome as a number of companies have continually been garnished and thus cannot access their bank accounts. This has led to some even folding depending on the assessed tax liability due to the collector of taxes thus rendering multitudes of workers redundant.
Much of this tax legislation was drafted prior to this multi-currency regime and consequently it is absurd that a law designed so long ago should continue to apply without substantial change to the whole of industry today, regardless of the size, location and purpose of the company.
Over time, many aspects of the tax code have become unwieldy and inefficient, and it is undisputable that one could craft a tax system that collected the requisite revenue in a way that made simultaneous improvements in efficiency, fairness, and simplicity. It is a constant lament of economists that policymaking too often gets in the way of such reforms.
It is a known fact that most companies under liquidation or judicial management in Zimbabwe owe vast sums of money to the tax authorities. To many an analyst’s surprise Zimra has remained tight lipped on their plight.
While tax breaks and other incentives have been put forth, much of the incentives have often been restricted to specialised sectors like tourism and mining with whom up until lately the benefits did not filter down to the majority. There has been much ado about Special Economic Zones, it is yearned that these will give a reprieve to the already heavily incapacitated industry.
Not so long ago, South Africa was faced with a problem of where a number of potential taxpayers were either not remitting or falsifying their tax returns.
As a way of increasing its tax collections the South African Revenue Services (Sars) offered a general tax amnesty to those concerned under one condition; that they submit a proper tax return clearly expounding their tax affairs. The gesture was well received and many companies and individuals gladly complied. Should Zimbabwe go this route it will ensure an increase in tax revenue at the same time preserving whatever industry that is left.
In Zimbabwe and world over, taxation has an important role to play in both protecting the revenue-raising capacity of the income tax system and addressing income disparities.
Instead of Zimra being always on the lookout for would-be non-compliers; such an approach will ensure a fresh start for all those involved.
Instead of Zimra spending much of its resources on these so-called “lifestyle audits” it should be engaging all the embryonic taxpayers and rehabilitate offenders rather than condemn them to the literature of yesteryear tax offenders.
Frankly speaking, if Zimra is serious about increasing its revenue base through the use of lifestyle audits it should start from within its structures on their employees rather than on entrepreneurs who risked their capital and put thousands of workers on the job.
Zimra is the nation’s collection basket and it should not be seen as being at the forefront of our industry’s demise but rather its main advocate and rehabilitator.
I am well aware some might say I am barking at the wrong tree or my submissions about Zimra are tantamount to shooting the messenger, Zimra is the institution that is better placed to put up any propositions to the cabinet and legislature.
Sikhulumeli Khole is an accountant with a local company. He writes in his own capacity. He can be contacted at [email protected]
