Harare City Council should have been forwarding the taxes it deducts from staff monthly salaries and not waiting for Zimra to garnishee its bank accounts for more than $115 million it owes, as everyone has a statutory obligation to pay taxes on time, Local Government and Public Works Minister July Moyo has said.
Harare City Council’s accounts were recently garnished by Zimra over $115 million in tax arrears with the council instead of taking ownership of its failure to forward the taxes each month is now trying to evade responsibility by blaming the garnishing as having left it struggling to offer basic services.
As Harare City Council is a non-profit local authority, and VAT is not charged on rates or most of its other sources of income, the bulk of the money it must send to Zimra each month will consist of the PAYE it deducts from the salaries and wages of staff before depositing the remander in their bank accounts. The taxes have therefore been paid, by the workers, but instead of sending these PAYE deducations to Zimra, Harare City Council has apparently been using the money for whatever it spends money on, adding it to what it collects in rates.
Minister Moyo has also noted that besides hanging onto the PAYE they deduct from their workers, many councils are also hanging onto the pension fund contributions, also deducted from staff.
In a statement on Monday the Minister said payment and forwarding of taxes was a statutory obligation that should be strictly adhered to.
“We have noticed that many councils are not paying attention to statutory obligations particularly to Zimra and pension remittances prejudicing employees on retirement and the Ministry will liaise with concerned institutions to take corrective measures,” he said.
Last week, Harare City Council had advised residents and ratepayers that the Zimra garnished the council bank accounts demanding full payment of $115 million in outstanding tax payments.
According to the local authority the garnishee order was adversely affecting the council’s daily operations as the city could not honour payments to service providers, including fuel and suppliers of water treatment chemicals.
“This has seen the city failing to collect refuse in time, resulting in garbage piling up across the city. The city is resultantly failing to pay its workers,” said the city.
Harare City Council further said its management was engaging the revenue collector to seek relief so that available resources can be ploughed into service delivery.
The city also said its revenue inflows have been greatly affected by the effects of Covid-19.
While the council may try to use Covid-19 as a scapegoat for poor service delivery which is worsening by the day, evidence on the ground which was there for everyone to see in 2020 proved otherwise.
The past year exposed existing massive corruption, land scams, leadership crises, arrests, demolitions and of course the ‘usual’ poor service delivery.