via Zimra predicts “serious revenue shrinkage,” eyes offshore account tax | The Source on April 8, 2014 By Bernard Mpofu
Zimbabwe’s revenue agency marginally exceeded its target of $818 million for the first quarter of this year, but predicts tapering collections amid a worsening economy and seeks to tax funds held in offshore accounts to ease a deepening cash crunch.
Zimbabwe is relying almost entirely on the Zimbabwe Revenue Authority’s collections, due to limited access to donour funds after falling out with the West over perceived human rights abuses by President Robert Mugabe and the failure by Harare to service its debt to multilateral lenders.
Commissioner-general Gershem Pasi told a parliamentary portfolio committee on foreign affairs that the agency had proposed to the finance ministry to expand the tax pool by levying charges on accounts held offshore by banks.
“We realised that more is being kept outside by banks than is required to meet international obligations,” he said.
Quarterly revenue for the period ending March 31 was up two percent on the targeted $818 million, he told the committee, adding that the economy was facing a gloomy future unless the country gets a stimulus package.
“We have exceeded the target by two percent notwithstanding the state of the economy. Things are not well out there and we have predicted that until and unless we can have some inflow of some revenue into the economy, we may be heading for a serious shrinkage of revenue,” Pasi said.
Revenue collections last year accounted for 29 percent of GDP against a regional benchmark of 24 percent, Pasi said.
He said the agency would lobby the central bank for tighter foreign exchange controls. The controls were relaxed in 2009, allowing travelling individuals to take $10,000 per trip outside the country, but Pasi said millions were being lost this way.
“We went from an extreme where there was too much control on foreign exchange to where there was really no control. Most of the cash exports have nothing to do with economic revival and these are the areas where we will be engaging the new governor because it’s Zimra which has to explain the discrepancy between the exports and imports,” Pasi said.
“Of the $7 billion imports, $4,1 billion is government imports which don’t pay duty, and then you take imports from COMESA, SADC and bilateral agreements which chew another chunk. Applying import duty on the whole bill would be unfair.”
Pasi also lobbied the committee to push for the reconstruction of the country’s busiest border post, Beitbridge, to ease congestion and minimise corruption at the port of entry.
He said a plan to embark on the project, whose completion was set for 2010 was stopped by former finance minister Tendai Biti because he was unhappy with some sections of the contract.
“The contract on Beitbridge was signed and (the contractor) moved on site and according to what we gathered they spent about $5 million in preparatory works such as temporary shelter they built. The then finance minister decided to stop it and he did not explain to us why,” Pasi said.
Zimra was not party to the negotiations of the contract but only supplied a plan for the reconstruction, he said.