Zimra improves H1 revenue collections, misses target Highlights
‘Economic recovery lies in farming sector’
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