Zimbabwe Revenue Authority (Zimra) net collections for the first quarter of 2015 fell by 6% after the revenue authority raked in US$803,2 million against a target of US$850 million, with experts urging government to save the economy from collapse.
Tax experts say the low revenue collections was a reflection of declining economic activity in the country characterised by company closures and job losses.
Company tax contributed US$71,6 miilion to total revenue against a target of US$81 million. This translates to a negative variance of 12%.
Zimra noted that there was a 32% decrease in revenue collection from US$104,7 million that was collected during the same period last year.
Zimra attributed the poor performance of revenue to the harsh economic environment which has negatively impacted on companies’ profitability and viability.
The revenue authority conceded that local companies are facing several challenges which include liquidity constraints, antiquated equipment, insufficient credit lines, high cost of utilities and intermittent power supplies.
Tax expert Rameck Masaire said the dwindling revenues called for government to come up with remedies to rescue the economy.
“It is a clear indication that the situation on the ground is bad. If companies are closing down how do you expect them to pay tax. Government should come up with measures to save the economy so as to raise sufficient tax for its operations, ” he said.
According to Finance minister Patrick Chinamasa more than 4 600 companies have shut down since 2012, resulting in the loss of more than 55 400 jobs.
Masaire said Zimra was likely to be more thorough in Vat and Payee collections to make up for the gap left by poor corporate performances.
He said the impact of the tax amnesty on companies did not reflect on the recent figures by Zimra, as most corporates delayed participating in the amnesty.
“It is too early for them to have an impact on the latest results because when it (tax amnesty) was introduced last year organisations broke for Christmas and started preparing after the festive season,” he said.
Other tax heads that performed dismally are mining royalties which fell by 40% from the expected amount of US$32,5 million to US$19,6.
This is despite the fact that US$79,1 million was collected during the first quarter of last year.
Customs duty collection amounted to US$78,3 million against a target of US$86 million, resulting in a 9% variance.
Subdued by depressed tobacco prices contribution of other taxes was pegged at US$46,4 million against a target of US$57,9 million.
Another tax expert Eddie Cross forecasted a negative revenue collection in the entire year unless government expeditiously stems problems bedevilling the economy.
“This (fall in tax collections) is a reflection of declining economic activities in the country. Zimra is doing a good job but this is beyond their control. There is need for a way to stimulate economic activities. Government has to do many things like addressing issues of corruption and indigenisation, ” he said.
In his 2015 national budget presentation last year, Chinamasa revealed that 55 443 workers lost their jobs after the closure of 4 610 companies between 2011 and 2014.
According to statistics presented by Chinamasa, the tourism sector was the hardest hit with 2 142 companies closing during the three-year period with 18 413 jobs lost as a result.
In the manufacturing sector, 458 companies closed with 9 978 jobs lost during the same period.
The construction sector was not spared with 317 companies closing shop during that period, resulting in the loss of 3 651 jobs, while 368 companies in the agricultural sector closed down affecting 5 465 jobs.