Informal sector wants ‘friendly’ taxation

WOMEN and youth that run businesses in the informal sector have approached Parliament in their quest to make the Government put forward inclusive taxation policies that boost emerging businesses.

In order to best get the Government to see light into such a concern, the Parliamentary Portfolio Committee on Women Affairs, Community, Small and Medium Enterprises Development has said businesses can use the legislature to air their concerns.

In a meeting conducted by the Zimbabwe Coalition on Debt and Development (Zimcodd) last week in Bulawayo, the Committee’s chairperson Cde Chido Madiwa urged the informal sector players to be pro-active and do all they can to survive debt.

“In the interest of doing business profitably and for the benefit of the country, we all must pay tax. There is no way we can grow the economy and have sound businesses if we hide away from paying tax,” she said.

Committee member Mr Daniel Molokele said if businesses really want to challenge the Government on gender sensitive tax regime, they ought to use communication channels through Parliament.

“Use Parliament’s oversight role to argue your cause to the Government. Inclusive tax policies that favour the youth and in particular women have to be in place. I urge citizens and the businesses to have trust in Members of Parliament to voice their views,” he said.

The legislators said this as they met with policy makers, informal traders and Government departments in the meeting that was themed on “Debt and gender justice.”

Bulawayo Vendors and Traders Association chairman Mr Michael Ndiweni said women have been on the receiving end of unfair taxation and there was a need to correct that.

“Women in informal trading suffered a lot, in particular as they do their daily trading. It will better for all to understand that more than the tax, traders have to pull through in a very difficult environment,” he said.

Zimbabwe Youth Council manager for Bulawayo province Mrs Ruth Ncube called on the Government to come up with tax policies that favour young people.

“The Government has to create an environment that attracts youth-led businesses. They have to be accommodated.”

Mrs Ncube said the banking sector has to play a role and reduce its tax demands.

“The other factor is that the youth are afraid to use the formal banking system. Banks turn away youth-oriented business startups. The number of demands for collateral and taxation are discouraging.

“The situation at hand is that the youth feel Government owes them. They don’t trust the banks, said Mrs Ncube.

With activity in the formal sector having gone on a downward trend tremendously, owing to hyperinflation that led to closure of the manufacturing sector, it has been noted that the informal business terrain has been the hub of economic activity in the country over the past 20 years.

Covid-19 lockdowns have made worse the shift from conventional trading to the informal side that is dominated by small time traders who are into buying and selling.

A Confederation of Zimbabwe Industry (CZI) study on the impacts of Covid-19 this year points out that the local manufacturing industry was operating at 30 percent capacity utilisation, an indication that the rest of the economic activity lay in the informal sector.

The Government acknowledges the reality of the informal sector’s contribution to the economy and general household sustenance.

Finance and Economic Development Minister Professor Mthuli Ncube has on numerous occasions indicated that Treasury wants to tap in and help grow the informal sector contribution to the economy.

For years, debate has mounted on how best the informal sector can be taxed. Actors in the market were sceptical, arguing it was unnecessary for the Government to tax the informal sector. In other quarters, businesses in the sector said they were already reeling in over taxation.

A gender and youth sensitive tax policy was what most actors in the informal business wanted.

In a bid to increase contribution to the national purse, next year the Government will place new presumptive tax measures, said Minister Ncube in his 2021 budget presentation.

While the generality of informal sector was in agreement on the need for taxation, there are calls for Government to be “friendlier” toward youth and women-led businesses.