New taxes self-defeating

Government’s desperation to scoop up whatever revenue it can lay its hands on in order to boost the national coffers is worsening the plight of the people. Granted, government needs money to fund its programmes and projects as well as to pay thousands of civil servants.

Paul Bogaert
Paul Bogaert

However, as former ICT minister Nelson Chamisa said, you don’t have to rob poor Peter to pay poor Peter. What he meant was that it is self-defeating to squeeze from the poor the little they have and give to them back a fraction of that, because it leaves them worse off.

Government has devised a number of Machiavellian tactics in a desperate attempt to improve the trickle of money coming into the treasury. It started off with a scorched earth campaign against companies that have been defaulting on paying various forms of tax. While it is legal to do that and illegal for companies to evade taxation, there is need for wisdom.

The most important thing that government, especially through the Zimbabwe Revenue Authority, should have done was to carry out a study into the reasons why the business enterprises are failing to pay tax. Indeed, it is true that some of them were wilfully dodging the taxman despite making profits.

We are aware that Zimbabwean commerce and industry has become a servant of corruption and ill-practices amid a culture of seeking super profits.

However, it would undoubtedly be correct to assume that the majority of businesses were failing to pay tax because of the hostile economic environment in which they are struggling to operate. It is no secret that hundreds of companies have folded in recent years because they were victims of the macro-economic crisis characterised by power shortages, dwindling markets, the hyperinflation of yesteryear, stiff competition from imported goods, low liquidity and a scarcity of spare parts.

Many firms have drastically scaled down operations and retrenched staff as a belt-tightening measure. They have been making huge losses and are, in fact, struggling to keep afloat – let alone pay taxes.

ZIMRA’s adoption of a one-size-fits-all approach was unhelpful in the extreme. They should rather have tailored their garnishee orders to ensure that the companies remain in business – providing at least some employment to desperate Zimbabweans. As it stands, the strict garnishee arrangements will push some of the companies out of business, drive unemployment up and, ultimately, kill the goose that lays the egg.

Government is also moving fast to tax informal businesses. What it seems to conveniently ignore is that most of the people participating in informal trade are struggling to make ends meet. To make matters worse, Finance minister Patrick Chinamasa, last week introduced a new raft of measures meant to improve revenue collection.

These include a levy on airtime as well as higher taxes on imported goods and fuel. These measures will only result in steep price hikes and more poverty.

Post published in: Editor: Wilf Mbanga

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