The sectors that performed above target were VAT, corporate tax, excise and other taxes. But individual taxes and customs duty performed below budget.
The overwhelming performance by VAT and corporate tax has been largely attributed to improved local industrial capacity utilisation. Capacity utilisation has been growing since 2009, given the financial support the industry has received in recent years, through facilities that enabled companies to acquire new capital, carry out machinery repairs and secure raw materials. Growth is expected to continue with the launch of the industrial policy. The upward review of the tax free threshold and upward review of salaries by some companies gave some consumers increased spending power. The Buy Zimbabwe Campaign, aimed at stimulating the demand for local products, might also be starting to bear fruit.
Individual tax did not perform well because employees earning between $226 and $250 are now exempt. Customs duty did not meet its target largely because of import substitution.
The taxman has introduced tax registers with a view to boosting tax revenue from retail sales. But there is need to curb corruption among some ZIMRA officers, especially at the border posts, as this continues to prejudice the taxman of huge sums of money.
A quarterly surplus of $58.3 million is quite a lot of money for an economy grappling with liquidity challenges. The responsible authorities should therefore employ their wisdom to make sure that the surplus is allocated to productive areas with the potential to trigger positive action in other sectors.
Post published in: Business