In other news, the sky is blue. Okay, in all seriousness, ZIMRA is still struggling to collect revenue and its struggles unearth a bigger problem in Zimbabwe.
There simply is not enough production. We all have walked the graveyard that is Willowvale Industrial Area. Warehouses are bolted up and the open factories are operating at ridiculously low capacities.
ZIMRA says it is having difficulties collecting revenue because the structure of our economy and industries has changed. They say it used to be easier to collect as they could just visit companies’ places of business but today businesses are being run from houses and different places.
Whilst in the past just a drive to Willowvale Industrial Area would mean getting to meet with huge corporations and ensuring revenue collection in the millions from just a few companies that is not the case anymore.
The deterioration in the economy led to closures and most of the few still operational cannot afford to rent out those fancy warehouses, choosing to operate ‘elsewhere.’ Finding them has proven to be a challenge for ZIMRA.
In any case the ones ZIMRA is failing to locate are part of the even smaller group with registered companies. Zimbabwe is now made up mostly of what they call Informal Traders. ZIMRA knows of their existence but that’s the extent of their knowledge. Everything else are just estimates.
The revenue authority says that most of their revenue comes from individual tax, which is in line with trends around the world. So Pay As You Earn is the biggest contributor to ZIMRA’s coffers.
Zimbabwe has a frighteningly high unemployment rate which is the result of the business closures mentioned above. With most people unemployed or self-employed ZIMRA faces challenges collecting revenue.
ZIMRA says it is only collecting 30% of potential revenue and that the biggest defaulters are corporates. They owe the biggest portion of the tax debt. Again this can be attributed to the challenges businesses are facing operating in this harsh economy of ours.
The revenue authority believes that if they were to collect all that is owed to them we wouldn’t have the economic problems we are facing in this country. Right on guys, blame it all on tax defaulters, they are the reason the economy is a mess.
If I were the ZIMRA chairperson, Willia Bonyongwe, I probably would not have mentioned that ZIMRA does not know where those businesses are located but the banks and their clients do. It reflects poorly on the revenue authority methinks.
So there, ZIMRA is collecting only 30% of the little tax revenue due to it. What do you think about that? Are you actually glad that is the case since that revenue will mostly be abused by our government? Do let us know what you think in the comments below.
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