Revenue crisis: Govt in ‘obfuscatory guesswork’

THE dire warning from the Zimbabwe Revenue Authority (Zimra) that the country faces tougher times ahead with the cash-squeeze worsening due to depleted revenue inflows into state coffers only serves to further expose government’s illusion the economy is set for an indigenisation-inspired rebound.

Zimra reportedly collected US$248 million in February, but government spent US$265 million, leaving a US$17 million budget deficit.

A frank Zimra commissioner-general Gershem Pasi told parliament this week: “We are headed for serious shrinkage of revenue unless something is done soon to increase revenue in the country. It’s a miracle that we have surpassed our first quarter target … considering the current state of the economy. Things are not well out there!”

That is hardly news. Indeed, the economy is deteriorating, as it has been for a decade before 2009, but what are authorities doing about it?

Ordinarily, Zimra, deriving its mandate from the Revenue Authority Act and subsidiary legislation, is tasked with assessing, collecting and accounting for revenue on behalf of the state through the Minister of Finance.

But the frantic manner in which it has been going about its business recently amid a blaze of publicity, coupled with government’s delays in paying salaries and effecting an agreed-to wage increment, exposes government’s desperation for funds and smoke-and-mirrors tactics.

Whatever the case, media reports have been focusing on Zimra’s vigorous attempts to collect as much revenue as it can. This includes plugging revenue leakages, targeting the non-tax paying informal sector and garnishing defaulters including “bank accounts of state-linked enterprises whose top management are manipulating records and using political influence to avoid paying taxes”. So dire is the revenue situation that Zimra is also mulling tax on offshore accounts, among other measures to increase revenue collections.

According to reports, Pasi is under immense pressure from his Finance ministry bosses who are breathing hard down his neck through daily calls to check what has trickled into Zimra’s meagre coffers. Concomitantly, Zimra is also raiding companies to ensure tax compliance and handing out stiff penalties to defaulters. But the blitz and penalties for defaulting firms are seen as sounding the death knell for companies reeling under financial pressures, including wages, pension contributions and late or non-payment by debtors.

This has all the hallmarks of a vicious cycle. As we reported last week massive retrenchments loom as indicated by applications recently made to the Retrenchment Board, with more than 1 500 workers set to find themselves on the streets if applications before the board are approved. Coupled with continued company closures, this means the tax base will further shrink.

As usual, government has a scapegoat. There were claims last week at least US$7,4 billion was circulating in Zimbabwe’s informal sector and government has taken a deliberate move to formalise operations in the sector, something analysts described as an “obfuscatory guesswork”.


4 Responses to Revenue crisis: Govt in ‘obfuscatory guesswork’

  1. protestor April 12, 2014 at 9:48 am #

    What is deflation ???

  2. Buffalojump April 13, 2014 at 6:54 am #

    Deflation is when everything goes down in value. Land decreases, homes decrease etc. So for those who are fortunate to own property their investment will be worth much less.

    • Chris Veremu April 13, 2014 at 3:47 pm #

      Might one be tempted to call this poetic one stole the earth and invested in cars and houses as an investment, now with deflation how does it look when all you have for your troubles is that all you sweated for stealing and hiding under bushes has now been reduced to a quarter of what you put in?Those cars and houses which were priced into the stratosphere when you bought have lost 80% of theirvalue and counting on. So what are you gonna do? Maybe you should have taken the Mosaic ten a tad seriously, yah? These have one law that reads, thou shalt not steal. You see people have dossiers of what you stole, they are just waiting for the right moment but then what you stole is evaporating into dust but these ugly faced brutes have what you stole in dollars not in houses or cars..This blund knife cuts both ways, does it not? And dont even think of killing yourself because this means your family which is not as tough as you were is going to have to answer for this..are you going to be this much a coward???? Well, you could steal more couldnt you?

  3. whyalwaysme April 13, 2014 at 1:29 pm #

    well well. zimra and government should have been focused more on developing the productive part of our economy and making it grow other than just becoming the new money spenders. now the side of industry that has been funding the fiscus since the USD introduction is no longer enough and instead of living within your means you now want to pounce on the informal sector which white collar people scoffed at for a long time, now even they have businesses in the informal sector, to remain afloat to give yourselves a lifeline. i dont think it is the revenue collections zimra should improve, it is the way funds are utilised.

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