Zimra im­proves H1 rev­enue col­lec­tions, misses tar­get High­lights

‘Eco­nomic re­cov­ery lies in farm­ing sec­tor’

Chronicle (Zimbabwe) - - Business Chronicle - Pros­per Ndlovu Busi­ness Ed­i­tor

THE Zim­babwe Rev­enue Au­thor­ity (Zimra) recorded a grad­ual im­prove­ment in rev­enue to about $1,7 bil­lion in the first half of 2016 although short of $1.75 bil­lion tar­get by 6.03 per­cent com­pared to 9.31 per­cent deficit in the same pe­riod last year.

The tax au­thor­ity’s rev­enue per­for­mance re­port for the pe­riod shows the bulk of the rev­enue for the pe­riod was de­rived from in­di­vid­ual tax at $355,7 mil­lion (22,95 per­cent), fol­lowed closely by ZIM­BABWE re­quires ur­gent cost re­struc­tur­ing mea­sures with a bias on sup­port­ing agri­cul­ture so as to achieve mean­ing­ful eco­nomic growth, Zimra said. The coun­try’s econ­omy is based on agri­cul­ture and its peo­ple’s core com­pe­ten­cies lie in this sec­tor, board chair Mrs Wil­lia Bony­ongwe said yes­ter­day.

She urged the Gov­ern­ment to build more dams and de­velop suf­fi­cient ir­ri­ga­tion in­fra­struc­ture, which would in­crease job op­por­tu­ni­ties and Gross Do­mes­tic Prod­uct, the pri­mary in­di­ca­tor on the health of a coun­try’s econ­omy.

“Farm­ing is our way of life. There­fore, Zim­babwe’s eco­nomic re­cov­ery will al­ways lie in this sec­tor and there is need to sup­port farm­ing in a sys­tem­atic and sus­tain­able man­ner, which also does not re­verse the gains of the land re­form,” said Mrs Bony­ongwe in a state­ment on Zimra rev­enue per­for­mance for the first half of 2016.

“The Gov­ern­ment must also look into the cost struc­ture in the agri­cul­tural pro­duc­tion value chain, in­puts, elec­tric­ity, wa­ter, cost of money and tenure thereof.

“It must also reg­u­late the op­er­a­tions of the pow­er­ful car­tels in the mar­ket­ing of agri­cul­tural pro­duce.

ex­cise duty (20,24 per­cent), with VAT on lo­cal sales con­tribut­ing 18,37 per­cent and VAT on im­ports 10,97 per­cent.

Among top im­proved rev­enue heads is VAT on lo­cal sales, with­hold­ing tax on con­tracts, in­di­rect taxes and tax on div­i­dends, in­ter­est, fees and re­mit­tances.

Zimra board chair Mrs Wil­lia Bony­ongwe said while the econ­omy con­tin­ues to ride on “choppy wa­ters”, some pos­i­tive strides were recorded.

“A closer anal­y­sis of the gross rev­enue col­lected re­veals that the gross rev­enue for Q2:2016 was $866.96m or 10.87 per­cent more than the $782 mil­lion col­lected in Q1:2016. “It also re­veals that the June 2016 gross rev­enue col­lected sur­passed the monthly tar­get by 3.2 per­cent.

“This trend is ex­pected to con­tinue into the sec­ond half of the year de­spite fore­cast de­cline in eco­nomic growth,” said the board chair.

The econ­omy was ini­tially pro­jected to grow by 2,7 per­cent in 2016 but this has since been re­vised to 1,5 per­cent.

Mrs Bony­ongwe said while VAT on im­ports sur­passed tar­get, go­ing for­ward the trend would be damp­ened by the blend mea­sures to curb im­ports and re­vive lo­cal pro­duc­tion.

She said these mea­sures ex­plain why im­ports fell by 18 per­cent dur­ing the pe­riod un­der re­view.

Mean­while, min­ing roy­al­ties raked in $33 mil­lion against a tar­get of $51 mil­lion record­ing a 17 per­cent de­cline com­pared to $39 mil­lion that was recorded last year.

“The cur­rent pric­ing does not ad­vance suc­cess­ful farm­ing.”

Econ­o­mists have pointed to the high costs of do­ing busi­ness in Zim­babwe as a ma­jor im­ped­i­ment to at­tract­ing for­eign di­rect in­vest­ment.

These have been blamed for the in­flux of cheap im­ports and the re­sul­tant loss of mar­ket share and jobs by do­mes­tic firms.

Mrs Bony­ongwe said any in­crease in agri­cul­tural pro­duc­tion would yield a pos­i­tive im­pact on in­dus­trial ca­pac­ity and com­mer­cial ac­tiv­ity.

“Farm­ers can be or­gan­ised to sup­ply spe­cific agri­cul­tural prod­ucts to China to re­vi­talise the econ­omy.

“The mode of con­tract farm­ing can also be used so as to have mu­tual ben­e­fits and en­sure ad­e­quate work­ing cap­i­tal.

“That ap­proach will res­cus­ci­tate the econ­omy, cre­ate jobs and in­crease ag­gre­gate de­mand. It is only then that rev­enue col­lec­tion can in­crease sus­tain­ably for eco­nomic de­vel­op­ment,” she said.

Mrs Bony­ongwe said this was neg­a­tively af­fected by the slump in com­mod­ity prices but hoped that the cre­ation of the Con­sol­i­dated Di­a­mond Min­ing Com­pany would im­prove ef­fi­ciency and trans­parency in the ex­ploita­tion of the gems and in­crease earn­ings.

She called for the re­view of the min­ing tax­a­tion sys­tem to a sit­u­a­tion where Zim­babwe can ben­e­fit eq­ui­tably from its min­eral re­sources.

On one hand net col­lec­tions from cus­toms duty dropped 15.59 per­cent from $160 mil­lion in H1 of 2015 to $135 mil­lion in 2016, a move at­trib­uted to Cus­toms Duty sup­press­ing in­stru­ments, which en­abled im­por­ta­tion of goods un­der re­bates and con­ces­sions.

Ex­cise duty gar­nered 86 per­cent of the tar­geted rev­enue to $313 mil­lion while with­hold­ing tax on con­tracts brought in $40,6 mil­lion, which was 89,6 per­cent of the tar­get.

Col­lec­tions un­der the car­bon tax head were 89 per­cent of the tar­geted $17,8 mil­lion, with col­lec­tions of $15,9 mil­lion.

Other taxes among them cap­i­tal gains taxes, to­bacco levy, bank­ing levy and pre­sump­tive tax, brought in $30,4 mil­lion.

Mrs Bony­ongwe at­trib­uted im­prove­ment to the ben­e­fits of au­to­ma­tion, specif­i­cally the ef­fi­ciency aris­ing from fi­nal­is­ing the fis­cal­i­sa­tion project and the roll out of the tax man­age­ment sys­tem.

“Full au­to­ma­tion of Zimra sys­tems is ex­pected to im­prove rev­enue in­flows and com­pli­ance across all tax heads. It is also ex­pected to make it more dif­fi­cult to com­mit fraud or en­gage in cor­rup­tion,” she said.

Mrs Wil­lia Bony­ongwe

Ms Sithem­bile Pil­ime

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