Dr Masimba Mavaza | Zimbabwe is fighting hard to overcome a challenging economic environment. The problems being faced by the country will not be addressed overnight. It is critical to highlight that the economy is fragile and lacks the capacity to carry out basic functions of sustaining economic opportunities.
This is because a credible public revenue “taxation” system is not fully functioning.
Without taxation; creation of jobs, reconstruction of infrastructure, health and education delivery becomes very challenging.
There is rampant tax evasion by the few remaining big companies as well as the emerging small enterprises and the business entities are getting away with murder.
On the other hand, there is no open system of declaring profits and losses in the public domain. The secrecy surrounding this tax declaration breeds massive tax evasion.
Billions of dollars are being lost in unpaid taxes and serious externalisation of funds.
Zimbabwe has been reduced to a consumer State and companies only come to sell and not to produce. Millions of dollars escape the radar every day.
Externalisation of the much needed United States dollar has become the norm.
For example, a lawyer is paid in UK for services he renders in Zimbabwe while a medical doctor treats and practices in Zimbabwe and is paid in Sweden.
Similarly, groceries are paid for in USA, Canada, South Africa and UK and deliveries are done in Zimbabwe. People pay the US dollar abroad for their relatives to receive it in Zimbabwe and the dollar’s circulation is throttled.
The country has grown accustomed to politics at the expense of economic and social issues.
Zimbabwe needs to witness a shift of energy from politics, campaigns and squabbles towards development. The majority of the citizens are living far below the expected standards in a country where both human and natural resources are abundant.
Government’s grand vision in infrastructure development programs to create jobs and elevate poverty needs to be supported by everyone. Institutionalised corruption within Government, the private sector and non-governmental organisations needs to be dealt with.
Complex and outdated tax laws
The tax law, which was put into practice more than 50 years ago can not serve the current economic set up. It can not go with the prevailing globalization and automation.
Complexity in tax laws together with high rates, many tax brackets and narrow tax bases cannot help the system collect the due revenue in a situation where 90 percent of the productive populace is self-employed and there is no machinery to tax them.
There is a weak tax administration characterized by poor tax collection, follow up and enforcement due to a lack of skilled manpower, proper work procedures and rampant corruption.
Proper systems are needed to ensure that all revenue finds its way to the fiscus.
While there are huge economic challenges, there is abundance of economic opportunities.
Zimbabwe has an abundance of natural resources that are in high demand all over the world.
There is growing demand for the country’s diamonds and farm produce.
A number of countries are seeking investment opportunities to tap into the country’s natural resources.
The Zimbabwean economy is powered by remittances from many countries. However, without a proper taxing regime we continue shooting ourselves in the feet.
To generate the revenue required for infrastructure, health and education, the Government should concentrate in creating a credible and working taxation regime that makes sure telecommunication companies and money remittances, real estate transactions, import and export companies, are paying their tax dues.
Zimbabwe should have systems that encourage tax payment and discourages tax evasion.
The Government must invest in technologies that will make it difficult for corrupt officials to steal public funds. Payment fees at ports of entry, telecommunications and money remittances agencies can all directly be made electronically to the Government. Creation of an independent entity with the mandate to deal with corruption is required in the fight against the scourge.
Coming to invest in Zimbabwe must be made pleasant. At the moment, the business acumen at our ports of entry leaves a lot to be desired. Officers will be chatting among themselves while people queue for long hours. Client care is next to none and it feels like a crime to visit home. Service is rendered to those who ‘pay something’.
While there are more issues that need to be dealt with, the basis of this instalment is to call upon the Government to take substantive measures in reforming the country’s old system of taxation.Reducing poverty requires economic growth, a large volume of investment and more jobs. Effective and sustainable development also depends on provision of a wide range of welfare services such as education, health care and infrastructure.
These services come at a cost and development aid will never be able to fully meet this need. Better tax systems will provide Zimbabwe with revenues on a permanent basis that are large enough to finance a welfare society. Greed among those trusted with public offices should be stopped if a healthy investment arena is to be created for the benefit of the masses.