Govt mulls taxing informal sector

Source: Govt mulls taxing informal sector | The Herald November 24, 2016

Business Reporter—

Government is looking into the possibility of taxing the informal sector which has so far remained out of the tax net, depriving Treasury of revenue. Reserve Bank of Zimbabwe Governor Dr John Mangudya said Government needs to expand the tax base and extend the net to those who are also reaping benefits from the tax that is being paid by a few corporates and individuals.“We need to plug the leakages. We need to expand the tax base. If Zimbabwe is 70 percent, 75 percent, 80 percent informal sector it means we must have a tax that talks to the informal sector.

“Maybe we now need a flat tax for everyone who is business in terms of the informal sector, say maybe $10, $20 per month because those guys are also enjoying the benefits of the few companies that are paying,” said Dr Mangudya.

He was speaking at the Confederation of Zimbabwe Industries manufacturing survey launch yesterday.

“I think it might be high time we looked into the possibility of introducing a flat tax, not presumptive tax. You cannot have presumptive tax to the informal sector in Mbare because they do not sell to those who are formal.

Last month the Zimbabwe Revenue Authority announced that it had added nearly 4 000 tax players to the revenue collection system and will enforce more revenue collection strategies beginning January next year.

The new tax players were added to the net through the automation of the revenue collector’s systems, but this has not been extended to the informal sector. Tax avoidance and evasion are some of the issues that have contributed to the contraction in revenue collections in the country.

The tax collector’s focus is also on SMEs most of who are not also within the tax net. According to a FinScope SME Survey of 2012, SMEs employ approximately 5,7 million people. The sector is estimated to contribute more than 60 percent of the country’s GDP.

A World Bank survey of 2011 on 50 000 firms drawn from 99 countries showed that SMEs contribute to 66 percent of jobs in developing economies.


  • comment-avatar

    “We need to plug the leakages…….” Don’t you know where the leakages are? The biggest leakage is Air Mugabe, at a $1million a flight to Singapore or Dubai, or Equatorial Guinea or $1-1,5million each time to New York. The next big leakages are the Cabinet Ministers, the Forces Commanders and the fat cats of Harare who steal and externalize millions of dollars on a daily basis. Oh! yes – quite a few Zimra people are also stealing the US$. If you tax the informal sector (for a small amount in the bigger picture) then you should tax the rural people on their free food aid that they are given – after all, don’t you want to tax EVERBODY in this country so that you can steal more? Tax avoidance and evasion are not the main reason for lack of income, they are, after all, a natural reaction to the wholesale thievery that takes place in this country on a daily basis. Why don’t you plug that leakage?

  • comment-avatar

    Interesting proposal from a whole PhD holder (I guess, PhD in economics for that matter) & a Reserve Bank Governor. So ambuya vari kumuka na 4 am vonanga kuMbare kunotenga tumuriwo twavo kuti vaswera vachitengesa vari pachivanze chavo or anywhere – literally kuti vakwanisevo kurarama. Tomboti pazuva rose roga-roga (avearge) vano wana extra $3 for all her efforts & capital injection. That means $90 per month total returns to this ambuya (not profit or whatever – simply return on all capital & labour. Now our learned Dr Mangudya, in a desperate move to fuel the looting appetite of his bosses would rather have a share of that $90 per months. And, of course give it to the Moyos of zanu pf to buy cars, bicycles, ear-ring, & gold watches for boy-friends & girl-friends. nxaaaaaa