ZNCC warns ZIMRA

The Zimbabwe Revenue Authority (ZIMRA)’s planned rollout of more revenue collection strategies may not produce the desired results because of the economic implosion which has hurt the taxpayers, the Zimbabwe National Chamber of Commerce (ZNCC) has warned.

Currently faced by a shrinking tax base, ZIMRA, missed its revenue collection target by six percent in the six months to June 2016, and is now moving towards enforcing more revenue collection strategies beginning January 2017.

ZIMRA has added nearly 4 000 taxpayers to the revenue collection database through its automation exercise in the hope of meeting its next targets.

Board chairperson, Willia Bonyongwe, said the authority will intensify anti-corruption campaigns and tax education, noting that its automation system has helped increase efficiency, minimise corruption, enhance convenience, efficiency and accuracy.

Prior to automation, under declarations were as high as 60 percent at times.

ZIMRA avers that tax avoidance and evasion have contributed to the contraction in revenue collections as companies and individuals dodge the tax net.

“There is recognition that the tax base has shrunk, but it (tax avoidance) is still there because we see people driving expensive vehicles and developing mansions that are not on mortgages,” said ZIMRA board chairperson, Willia Bonyongwe.

“There is a shift in the economy, which makes it difficult to see what is happening and what to collect. People are running businesses in their homes and making money.”

But ZNCC chief executive officer, Christopher Mugaga, believes that companies have been stretched to the limit and may find it difficult to cough up no matter how hard the taxman may try to squeeze them.

“Reading the riot act to them (companies) will not help, but worsen the situation. Instead, meaningful engagement with the taxman is needed. The environment here is harsh, but we still need to work together,” Mugaga said.

Bongani Ngwenya, an economist at Solusi University, said it would be difficult for ZIMRA to collect more money than they are collecting at the moment considering that the tax base and revenue collection potential continue to narrow.

If ZIMRA is to meet its targets, Ngwenya continued, it has to revise them downwards even though the revenue to be generated would not then sustain fiscal expenditure.

“The truth is that it is not necessarily tax evasion and avoidance that has caused ZIMRA not to meet revenue collection targets, but the challenge has been the ostrich mentality of wanting to bury the head in the sand (in the hope that the problems will be wished away). ZIMRA has been setting for itself unrealistic revenue collection targets,” said Ngwenya.

Economist, Stevenson Dlamini, said while it was true that some companies were evading taxes, the business environment remained highly unfavourable for ZIMRA to meet its targets.

He said illicit financial flows which are too sophisticated for the taxman to detect were also contributing to the poor revenue collection. The Financial Gazette