via Editorial Comment: Zimra should be merciless with tax evaders | The Herald February 3, 2014
The news that Zimra is investigating the extraordinary salaries earned at some State-linked enterprises to determine if full taxes were charged on everything paid to executives might just send a shiver up some expensive spines.Payments at some firms could have been made in cash or as normal deposits, meaning the taxman never got a penny out of them.
The Zimra investigation should not take long.
Tax for employed people is very simple to assess: if you work for someone you pay tax on just about everything you get from that someone else.
So all Zimra need are the final totals after the auditors have moved in and then make a simple calculation to compare that with what was remitted as tax.
Any gaps then need to be explained.
There could be some interesting double jeopardy.
Every employer is supposed to deduct all tax and send it within days of the end of the month.
Many larger and more organised employers take full responsibility for this so their employees do not have to fill in any forms so long as they have no other source of taxable income.
But an employer who fouls up can be liable, and if that CEO who is supposed to ensure proper taxes are paid is also the one making “mistakes” on his own tax deductions, then either way Zimra wins.
In the United States and some other jurisdictions, tax evaders are jailed automatically.
A similar system would not be usual in Zimbabwe where penalties are assessed.
But if Zimra wants to get heavy, it can take tax evaders to court. And perhaps the time is coming when it should.
In any case, since everything is added together for taxes, the weird system of salary plus allowances is really outdated.
Everyone should have the lot lumped together as salary. The gross and post-tax numbers will be the same and there will be a lot less opportunity to fiddle with figures.
Allowances, once, were tax free as they still are in the civil service. But now everyone outside the service pays tax on them. So there is no need to pile them up.
There is a lot of public anger over the salary scales. If people want to earn big sums they must own their own business, and even then most of their income will be in dividends, taxed at a lower rate, rather than salaries. And dividends depend purely on how successful you are: if you make a mess of things you have no profits, if you make a bundle you take your cut.
The public sector must now be regularised.
The “market rate” for many jobs is easy to find. For example, a confidential inquiry with Cimas will, we are sure, produce a figure for managers that is way below what PSMAS was paying.
It is no use comparing unlike with unlike; State enterprises need to compare like with like.
One way of weaning both public and private sector top managers off guaranteed high salaries could be a super-tax, say on all pay over US$10 000 a month.
Dividend income would be excluded from this extra tax, to encourage those with business acumen to own and run their own business and thus contribute to the economy.