New rules for traders to drive Govt revenue
KEY players in industry and commerce have welcomed proposals in the 2024 National Budget Statement that will require all local traders wishing to procure goods from manufacturers to be licensed, as well as have tax compliance certificates.
Registered retail operators from diverse sectors of the economy — including food, clothing, textile and footwear — had lately fallen victim to the activities of the fastgrowing informal traders, who were getting priority in terms of the supply of goods by manufacturers.
The formal operators implored Government to address the situation, which was threatening the viability of wholesale and retail companies. The informal traders also sold grossly discounted goods because they did not pay taxes and smuggled goods.
However, once they become registered and compliant with taxation requirements, the shadowy operators may no longer be able to maintain the unfairly low prices that attracted hordes of customers and gave them an advantage over registered businesses.
Compliance with national tax requirements is critical as it is the biggest avenue through which Government mobilises revenue used to finance key programmes that include construction of roads, schools and health facilities.
According to the key business leaders, formalising the retail and wholesale sector is a critical step towards achieving sustainable economic growth, employment creation and an improved business environment in Zimbabwe as the country moves towards attaining National Development Strategy 1 (NDS1) targets.
The Government was losing 25 percent of the revenue collections due to lack of tax compliance.
Confederation of Zimbabwe Industries president Mr Kurai Matsheza said the 2024 National Budget would see the Government improving on its revenue enhancement measures.
“For example, only traders registered for value added tax purposes and are in possession of valid tax clearance certificates will be eligible to procure goods from manufacturers. Such a policy will improve the revenue base for Government,”he said.
Presenting the $58,2 trillion 2024 National Budget statement, Minister Ncube said the growth of the micro and small enterprises was undermining domestic resources mobilisation efforts due to informal traders that predominantly conduct business only in foreign currency.
The minister’s latest budget statement, presented against the backdrop of tight fiscal space, a slowing global economy and the threat of the El Niño weather phenomenon, sought to consolidate gains of the last five years, maintain stability and drive modest growth.
The 2024 National Budget — themed “Consolidating Economic Transformation” — builds on socio-economic achievements that have been made over the past five years and seeks to place the country on a solid foundation for further development and growth.
The budget has projected economic growth of 5,5 percent from the 5,3 percent predicted earlier, while the growth is expected to slow down to 3,5 percent next year due to the negative impact of El Niño on agriculture.
Minister Ncube noted that the informal business model structurally avoids regulatory requirements that include compliance with taxation and local authority by-laws on operating infrastructure.
He said achieving an “empowered and prosperous upper middle-income economy by 2030”is largely dependent on the country’s ability to mobilise domestic resources, in the absence of concessionary external finance and grants.