via Zimra misses target as economy shrinks – NewsDay Zimbabwe November 2, 2015
…taxman urges slashing list of zero-rated goods
THE country’s revenue collector, Zimbabwe Revenue Authority (Zimra) has missed its revenue collection target as the economic situation in the country continues to deteriorate forcing the beleaguered tax collector to seek a review of non-taxable imports.
By XOLISANI NCUBE
A revenue performance report for the third quarter of 2015 by Zimra chairperson, Willia Bonyongwe disclosed that the country‘s taxman missed the collection target by 8% while there was a 7% revenue collection decline when compared to the same period in 2014.
In a statement yesterday, Bonyongwe said during the period under review (June to October), Zimra collected $878,22 million against a target of $964 million — a 7% drop from $884 million collected during the same period last year.
The tax collector indicated that potential revenue of $265 million was forgone in the last three months due to the long list of supplies that have a zero-rate tag or were under duty exemption.
To plug the ever deteriorating collections, Zimra suggested: “the long list of VAT zero-rated and exempt supplies needs to be looked into as we go into the future”.
Individual tax and excise duty contributed the bulk of the revenue with tax on alcohol, fuel and airtime keeping the country going.
“The economic environment remained harsh for the third quarter of 2015. The liquidity situation has not changed despite the current initiatives to solve it. A lot of companies closed down or are in further distress as a result of the situation,” Bonyongwe said.
Statistical review of the statement indicated that the mass job carnage which characterized the country from July to October when over 20 000 workers were laid off on three months’ notice had an adverse effect on revenue collection as Zimra managed to get $195,50 million against a target of $203 million, missing the target by three percent.
The decline in Pay-As-You-Earn resulted in a 13% decline from $226,23 million collected in 2014 during the same period.
“The performance of the revenue head can be attributed to retrenchments and reduction of remuneration packages, therefore, going forward this revenue head is under pressure of levels of employment and remuneration packages,” Bonyongwe said.
The Zimra chairperson desclosed that the tax collector was owed in excess of $600 million in Pay-As-You-Earn as most companies were battling to meet statutory obligations. This was despite deducting the money from employees’ salaries.
However, excess duty, surpassed its target by 11% with tax on fuel, airtime and beer keeping Zimbabwe afloat.
“Revenue from excess duty amounted to $176 million of the target of $151 million. Excess duty on fuel was the main contributor with contribution of 78,69%, beer and airtime contributed 8,4% and 5,4% respectively,” Bonyongwe said.
Although most Zimbabweans were hard-pressed, they still import and Value Added Tax (VAT) on imports, according to Bonyongwe, surpassed the target by 10% as $116 million was realised against a target of $104 million.
Bonyongwe said VAT on local sales also increased by 10% although it fell short of the target by 15% as a net collection of $136 million was realised against a target of $161 million.
“The performance of VAT on local sales can be attributed to low disposable income due to retrenchments and company closures. High tax forgone through exemptions and zero-rated supplies which is 56% of the potential gross revenue,” she said.
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