Turning the screws

Private education is increasingly under pressure in Zimbabwe, as the Mugabe government finds more ways to make life difficult

With a new judgment by that country’s tax court, Zimbabwe’s government authorities are continuing to besiege private schools. Though the schools and their governing bodies are overwhelmingly black they are seen as elitist and thus a legitimate target for punitive intervention.

The latest decision concerns six private schools involved, for some years, in a dispute with the Zimbabwe revenue authority over the meaning, in tax terms, of lower fees charged for children of teachers working at these schools. The schools, not named in the court record, are all private high schools, though three also have a junior school, jointly administered with the high school.

All these schools faced the same tax conundrum: among their staff are teachers with children of school-going age who attend their parent’s school at a reduced fee. On average these parents pay between 20% and 25% of the full fees paid by other parents.

The Zim taxman has been after these schools on account of what is called their “pupil sponsoring scheme”. In November 2012 and November 2013 the revenue authority issued a determination charging the schools the tax it said was owing for the “benefit” enjoyed by staff, and which had not been assessed and made part of the pay-as-you-earn deductions from the salaries of the relevant staff members. The schools objected and the matter was referred to the tax court in Harare, where it was heard by Judge Samuel Kudya.

He said three issues had to be decided: whether the scheme represented a “benefit” as defined in the tax laws and was thus subject to the deduction of pay-as-you-earn; if so, how the value of the benefit should be computed; and whether the tax authorities were correct in the method they had used to establish the amount due.

We are hardly talking great numbers here. One school had just 11 out of 540 pupils on this “scheme”; another, 32 out of 1,120 and a third, eight out of 560 children. But legislators felt so strongly that they passed new laws in 2012. These came into force in 2013 with an amendment specifically incorporating reference to the tax implications of the school fees benefit.

So while the situation was clear from 2013 onwards, the fight before the tax court was over interpretation of the legislation as it was worded in the immediately preceding years.

Perhaps inevitably, the court found the benefit taxable, though it tinkered slightly with the way the tax bill should be computed and said each side should pay its own costs.

Zimbabwe’s private schools are constantly targeted by government officials through legislation, regulation, rhetoric or unilateral action. For example, in October 2015 education minister Lazarus Dokora slated schools offering Cambridge exams: “We are saying: if you are importing exams, you are importing a luxury commodity.” According to The Herald, he said his cabinet colleagues were considering taxing those who took the exams, and said private schools were not to “deviate” from the government-approved curriculum.

State exams “met global standards”, and students who passed these exams did well across the globe “including places such as Ukraine where they have excelled”, Dokora said.

In March 2015, Tim Middleton, an official representing heads of Zimbabwe’s independent schools, listed some of the more bizarre challenges the schools faced. If a team wanted to travel to another school in a different province, for example to play sport, it would have to get permission “four months in advance” from the provincial education director of every province through which the team would travel. This could mean getting a permit from five provincial authorities.

He said tax-related pressure on the schools and staff was “relentless”, as was pressure from inflation that made proper budgeting impossible.