Tobacco slump affects revenue

Zimbabwe’s Revenue Authority chairman, Sternford Moyo, said the country’s failure to meet its tobacco sales by 40 million kg affected its revenue collections in the third quarter.

He said Zimra’s individual tax collections had increased by 20% to $148,6 million against a targeted $123,7 million.

“In the period under revenue, Zimra’s major contributor, value added tax, missed its set targets by six percent to close at $225,5 million,” he said.

The country auctioned off 140 million kg during the past tobacco-selling season against a projected 180 million, while its total revenue collections increased by three percent to $660,7 million for the quarter.

“The lower collections from Tobacco Levy are attributed to the fact that the country produced lower volumes than originally projected,” Moyo said.

Zimbabwe is the world’s sixth-largest exporter of the flue-cured tobacco behind Brazil, India, the US, Argentina and Tanzania.

Zimbabwe earned $347,8 million from tobacco sales last year, according to industry regulator, Tobacco Industry Marketing Board, with China emerging as the main buyer of the crop.

“Vat collections fell short of the Ministry of Finance target because capacity utilisation for the local industry is gradually picking up. Vat on local sales contributed 44% of total Vat revenue while the remainder was from Vat on imports,” Moyo said.

“This constituted a positive variance of 20% against target. Improvements in local capacity utilisation had necessitated the recruitment of more employees, hence the improvement in the performance of the revenue head,” he added.

However, Moyo said the revenue collector had also failed to meet its corporate tax collections by 16% which he attributed to operational challenges.

“Collections were $67,9 million against a target of $81,1 million as many companies are still affected by liquidity challenges,” Moyo said. “In addition, constant power outages are working against productivity in many companies and this is negatively affecting profitability.”

Moyo said Zimra had realised $85,2 million in customs duty collections against a projected target of $89,2 million.

Post published in: Agriculture

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