Categories: Economy

The government is coming down hard on the informal sector

Share

The informal sector was among the hardest hit when lockdown measures were at their tightest. Their businesses and services fell out of the bounds of what was deemed essential services so many of them couldn’t earn a living. Many struggled desperately to make ends meet during that time and returning back to work didn’t magically solve everything.

I can imagine it was like starting from scratch because any reserves would have been depleted by the time they lockdown restrictions were lifted. Now, what I thought would be the logical course of action would be leniency going into 2021.

But as we saw with what the Minister termed “Tax Relief” there is no joy here too.

advertisement

Honourable Members would be aware that Government has implemented a presumptive tax structure on informal businesses that include micro and small enterprises, with a view to ensure that they contribute to the Fiscus.

A number of enterprises operate from designated business premises
where the landlords are either Local Authorities or private property
owners such as the Gulf Complex and Kwame Nkrumah Mall, among
others. Their place of business is, thus, comprised of partitioned units in
commercial buildings.

The fixed nature of business, thus, presents an opportunity for the tax administration to improve tax collections from presumptive taxes I, therefore, propose to introduce a presumptive tax of an equivalent of US$30 per unit per month In the case of Hairdressers, restaurants, bottle store operators and cottage industry, the following presumptive tax rates will apply:

Mthuli Ncube, Minister for Finance (National Budget Statement)
CategoryPresumptive Tax rate Per Month (ZWL$)
Hairdressers2 500 (approx. US$30.56)
Resteraunts and Bottle Stores10 000 (approx. US$122.25)
Cottage Industry10 000 (approx. US$122.25)
USD convertions were at the Auction Rate (1:81.8) published 24/11/2020

Property owners will be responsible for collecting remitting the tax. Failure to do so will result in the landlord being charged the equivalent of the total amount plus interest.

Where are they expecting people to get this money from?

On top of rentals and families to feed the government has decided to impose a tax on the informal sector which at this point is still recovering. This will most likely result in many traders no longer being able to afford the cost of operations and creep deeper into poverty.

I’ll admit I am an armchair economist but I doubt you’d argue that it doesn’t bode well for the economy if more people have less money to spend with little to no alternatives of earning a living.


Quick NetOne, Telecel, Africom, And Econet Airtime Recharge

If anything goes wrong, chat with us using the chat feature at the bottom right of this screen

View Comments

  • The 2% tax was meant to target the informal sector. Now they are targeting it again.

    Do landlords get paid to do administrate taxes? No! The tax man should do they job. It is hard enough trying to get tenants to pay their rent, now the landlord should chase after taxes.

    The tax man will be busy boasting that they met their quarterly targets, yet they aren't don't the work. Already, banks are collecting the 2% tax, whilst the tax man is sleeping.

    What happens if the money is lost/stolen in the hands of the landlord? It's poorly thought out.

    Cancel reply

    Leave a Reply

    Your email address will not be published.

    • Extremely poorly thought out, they seem to shift the burden of duty to the citizen at every turn.

      Cancel reply

      Leave a Reply

      Your email address will not be published.

Leave a Reply

Your email address will not be published.

Published by
Valentine Muhamba

Recent Posts

Review of Microsoft Cloud for Healthcare – 5 things to note

Review of Microsoft Cloud for Healthcare enteprise solution, 5 things to note for any institution…

January 20, 2021

Video: Sky Force Reloaded gameplay. Stage 8 level insane

Here is some gameplay of Skyforce reloaded. It is a fun shooter arcade game with…

January 20, 2021

Google Chrome update will help you make your passwords stronger

Google is rolling out a new update for Chrome which will help you identify and…

January 20, 2021

Alibaba founder Jack Ma resurfaces after months of silence

Alibaba Founder Jack Ma has resurfaced after months off the grid after he made remarks…

January 20, 2021

Distributing the COVID-19 vaccine in Zimbabwe is going to be a nightmare

There are a number of variables that are going make distributing the 3 million COVID-19…

January 19, 2021

Some bank branches may never reopen because of COVID

Owing to COVID-19 and the digital drive that come because of it, some bank branches…

January 19, 2021