Finance Minister urged to plug revenue leaks

via Finance Minister urged to plug revenue leaks | The Zimbabwean by Farai Mabeza 24.09.13

Government revenue collection systems require tightening up to enable Treasury to help address the current constraints on the fiscus, say analysts. Zimbabwe faces huge demands for support from all sectors, from ordinary farmers to commerce and industry, to revive the economy. Unless drastic measures are taken to plug revenue leaks, the economic crisis could prove difficult to overcome.

“There are leakages everywhere – income tax, at the border posts and in the informal sector. It is going to be a huge challenge for the minister (of finance) to plug those holes,” said economist Innocent Makwiramiti. “Chinamasa faces huge expenditure such as the civil service salary bill where any increments need to be matched by increased revenue. He has to improve the revenue base. Our imports are worth around $7 billion yearly and that means we could be collecting as much as $2 billion in tariffs – but we are nowhere near those figures. At the same time very few companies are paying corporate tax,” he added.

Makwiramiti said Zimbabwe needed to follow South Africa’s example and impose a tax system on the informal sector. “As much as 80 percent of our economy is informal, meaning huge amounts of revenue are lost,” he said.

Another economist, Takunda Mugaga, said the high levels of corruption involving government officials and employees at state enterprises was an added problem.

“We are a net importer but revenue collected at the points of entry does not reflect this. We need to strengthen our borders to stop smuggling,” he said. “We expect indigenisation to be mild in order to attract more Foreign Direct Investment. We can capitalise on the appointment of the moderate Francis Nhema to the responsible ministry.”