Zim tops in tax collection in Africa

via Zim tops in tax collection in Africa | The Herald December 9, 2015

Conrad Mwanawashe and Munesu Nyakudya
ZIMBABWE is one of the top performers in tax collection and administration in Africa but more work needs to be done for the country to collect more.

The Africa Capacity Report 2015 released by the African Capacity Building Foundation reveals that low tax collection effort remains a critical issue around the continent.

Despite significant improvements in tax revenue collection over the decade 2006-2015, Domestic Resource Mobilisation remains low. Estimates show that during 1996-2010, 27 countries, representing 60 percent of the 45 countries covered by the African Capacity Report 2015, have made low tax collection effort.

But Zimbabwe has collected more than its counterparts in the region.

The ACR 2015 country case studies highlight a number of constraints which include very narrow tax base; the tax base is further eroded by high levels of capital flight, evasion and avoidance and proliferation of tax exemptions.

“Tax authorities lack legitimacy and capacity. Paying taxes is viewed as not being worthwhile because there does not seem to be tangible results from the ensuing public expenditure. Tax administrations have weak capacity, penetration of formal banking sector is relatively low.

“A large proportion of the population lacks direct access to the formal financial sector. Inability to collect taxes due to relatively large agricultural sectors that sell raw commodities and high level of informality in the service sector,” the ACR 2015 says.

The report further states that relatively poor business climate hinders levels of taxable profits and that countries lack the human, technical, legal and regulatory, and financial capacities to deal with IFFs.

Tax revenues continue to increase in Africa, and reached $507 billion in 2013, against $442 billion in 2007.

Officially launching the ACR 2015 report, Finance and Economic Development Minister Patrick Chinamasa said domestic resource mobilisation is not just a means to financing the country’s needs but is a must borne out of necessity.

“It is clear that given the diminishing levels of Overseas Development Assistance to Africa, successful implementation of Africa’s development agenda will rely more and more on internally generated resources.

“Out of necessity Zimbabwe has in terms of mobilisation of resources been more inward looking than ever before,” said Minister Chinamasa.

Zimbabwe has established a high level Cabinet Committee on Resource Mobilisation chaired by Vice President Emmerson Mnangagwa. Under this main committee there is a sub-committee on domestic resource mobilisation chaired by Minister Chinamasa.

The committee has so far put in place innovative measures which include broadening the tax base by introducing and extending a wide range of taxes on a wide array of economic activities in the informal sector.

The ACR 2015 notes that Africa lost an average of $60,3 billion – about four percent of GDP – in illicit financial outflows during 2003-12 period while the Official Development Assistance share of total external flows has been diminishing to 27 percent in 2014 estimated at $55,2 billion, from 38 percent in 2004.

The objectives of the ACR are to measure and examine capacity in relation to the development agenda in African capacity by focusing on key determinants and components for capacity of capacity for development.

COMMENTS

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    R Judd 7 years ago

    Whoopee! All of this is no good if the money collected is simply squandered. Squandering the core ZANU skill