HomeBusiness DigestGovt waits for company taxes to pay salaries

Govt waits for company taxes to pay salaries

THE Zimbabwe government, which is currently battling a deepening liquidity crunch, has had to turn to quarterly corporate taxes and expected tobacco inflows to pay civil servants this month’s salaries, businessdigest has established.

Kudzai Kuwaza

The government postponed salary payments for civil servants — which chew about 70% of revenues — to this week a move that has stoked fears that it could soon result in them completely failing to pay workers in the coming months.

This comes at a time when President Robert Mugabe has promised government workers Poverty Datum Linked wages. The PDL currently stands at US$540 per month.

The salary postponement from March 25 to March 27 was confirmed in a Finance ministry issued statement last week. Only uniformed forces and teachers received their salaries on time.

“Civil Service Commission advises that the ministry of Finance (Treasury) has moved the March 2014 pay date for the rest of the civil service from March 25 to March 27 2014,” Civil Service Commission secretary Pretty Sunguro said in a statement.

The announcement prompted outrage from civil servants, who accuse government of failing to consult them and expressed fears this was a harbinger of worse to come. It also raised fears that the promised increase in salaries for government workers by Mugabe will remain a pipe dream.

An insider in the ministry of Finance said they were hoping that the first quarter tax payments paid to the Zimbabwe Revenue Authority by companies would have been received by yesterday to enable them to pay salaries.

“The delay has just been caused by the expected quarterly tax payments by companies due to Zimra this month,” the source said. “The hope is that the tax payments would be available by then (the 27th of March) to pay civil servants as the general taxes are not adequate to cater for them.”

The failure to pay government workers on time, analysts said, was a result of an imploding economy characterised by an ever shrinking tax base as more companies downsize their staff complement or close shop altogether.

The Zimbabwe Congress of Trade Unions secretary general Japhet Moyo said government was running out of options as the liquidity crunch bites.

“The chickens are coming home to roost,” Moyo said. “They used to print money or raid banks to get cash to cover for the shortage of cash but now their options are limited.”

Moyo said if a solution was not found, the country could end up like countries such as Somalia which usually fail to pay their workers.

Economist Godfrey Kanyenze said delays in civil servants salaries was symptomatic of failure by government to work on measures to rescue the economy.

He said government’s pursuit of damaging populist policies at the expense of addressing fundamental issues through workable measures has been part of the problem.

The payment of civil servants gobbles more than 70% of the government’s revenue, something which economic analysts say is unsustainable.

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  1. Let’s not sound alarmist but all the pointers are that we could be leading to the point of a failed state. Icho! – to use Charamba’s catchphrase.

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