Familiar ring to Biti’s 2010 budget Dilemma

AS the country awaits the 2010 national budget economic analysts say focus should be on providing incentives to boost local manufacturing sector, realignment of tax rates and further tightening of government spending.

Minister of Finance Tendai Biti, as per tradition, is expected to present the budget during the last week of November but disengagement by MDC –T from government activities might cause some delays.
Consultations are currently low key.
Speaking to Businessdigest this week, Eric Bloch, a Bulawayo-based economic analyst said it was critical for Biti to announce steps and incentives that will facilitate investments.
Bloch said realignment of tax rates should be considered so that they match those that are being charged in the region.
“The tax rates that are being charged in the country are a major deterrent to investments and they have also led to a serious brain drain,” Bloch said. “The ministry (of Finance) needs to look into these so that the rates are similar to those in the region and also as a way of curbing brain drain.”
He also said businesses should not be forced to pay value added tax by the 15th day of every month when they only receive money from their clients at the end of the month.
He said government spending should be further curbed.
Bloch said the government should introduce incentives to motivate savings in order to restore liquidity in the financial sector.
Independent economic analyst John Robertson said “a tough year lay ahead of the country’s economy with efforts of restoring investor confidence being critical”.
An economic analyst said Biti faces a Herculean task of crafting a budget that would not be financed by taxes and duties paid on beer and cigarettes.
When presenting a revised budget early this year Biti lamented the fact that “indirect taxes made up of customs and excise duty have contributed 88% of government revenue, which means that the government has been literally sustained by beer and cigarettes”.
An analyst with Kingdom Bank said reviving the manufacturing sector was key to the recovery of the economy.
“We expect the minister to look into the issue of the window period of the duty free importation of goods,” the Kingdom analyst told businessdigest.
“The window closes on December 31 and we are hoping the minister will ban the importation of all basic goods. The manufacturing industry is losing business but local retailers are cashing in on cheap imported products which our industries can easily produce,” he said.
“If the government has no immediate use of the money made available by the IMF, they should give the money to banks that will be better placed to make use of the loan,” said the Kingdom Bank analyst.

 

Jesilyn Dendere

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