GOVERNMENT is irretrievably sinking deeper into a fiscal crisis as Zimbabwe’s tax base continues to shrink, while revenue collections dwindle at an alarming rate amid a severe liquidity crunch which has spawned low capacity utilisation, company closures and job loses.
Since the beginning of the year at least 600 workers have been retrenched, in addition to 9 000 retrenched in 2014.
Finance minister Patrick Chinamasa said in his 2015 budget statement more than 55 000 people had been laid off and 4 600 companies closed since 2011.
As a result, the Zimbabwe Revenue Authority (Zimra) has failed yet again to meet its target, with figures from January indicating a 14% revenue decline.
Zimra acting director for legal and corporate services Robert Mangwiro said this week net collections from January to date have amounted to US$468,53 million against a target of US$542,08m.
“The local economy has been facing a myriad of challenges for the past decade due to factors such as liquidity constraints, power outages and low industrial capacity utilisation,” he said.
“One of the consequences of these has been the failure by industry to settle tax obligations with some taxpayers accumulating unsustainable tax debts, which have so far accumulated to over US$1 billion.”
Revenue collection was particularly poor in the fourth quarter of 2014, with the trend continuing in 2015. The fourth quarter net collections were US$996,94m against a target of US$1,1bn, translating to a negative variance of 10%.
Zimra’s net collections for 2014 were US$3,6bn against a target of US$3,82bn, a negative variance of 6%.
Mangwiro said “this trend clearly calls for extraordinary measures”, hence the introduction of the tax amnesty to raise more revenue to boost Treasury’s depleted coffers.
Government’s revenue target for 2015 is US$3,951bn of which US$3,76bn is supposed to come from tax. After the expiry of the tax amnesty on March 31, Zimra plans a lifestyle audit and crackdown on the rich and famous.