Govt tar­gets un­remit­ted tax

The Herald (Zimbabwe) - - Business - Golden Sibanda

GOV­ERN­MENT will em­ploy ag­gres­sive mea­sures to col­lect un­remit­ted tax rev­enue amount­ing to $3,3 bil­lion, in­clud­ing in­ter­est, to clear Trea­sury’s $2,3 bil­lion over­draft po­si­tion with the Re­serve Bank of Zim­babwe (RBZ), ac­cord­ing to Fi­nance and Eco­nomic Devel­op­ment Min­is­ter Pro­fes­sor Mthuli Ncube.

The min­is­ter said the tax ar­rears of $3,3 bil­lion in­cluded al­most $1 bil­lion tax in­ter­est owed in taxes.

Fifty per­cent of the funds have not been re­mit­ted to the Zim­babwe Rev­enue Au­thor­ity (Zimra), which is ex­pected to turn the heat on tax pay­ers to set­tle their dues.

Paras­tatals and lo­cal au­thor­i­ties ac­count for 20 per­cent of the un­remit­ted funds.

Min­is­ter Ncube told Par­lia­ment re­cently that Gov­ern­ment’s over­draft po­si­tion was al­ready more than 20 per­cent of the pre­vi­ous years’ rev­enues, which at law is the max­i­mum Trea­sury is al­lowed to bor­row from the apex bank.

The fi­nance chief in­di­cated his min­istry had a two pronged ap­proach to clear the debt in­clud­ing re­duc­ing Gov­ern­ment ex­pen­di­ture and with it reliance on the RBZ over­draft fa­cil­ity and us­ing pro­ceeds from un­remit­ted taxes to Zimra.

“First of all, we are go­ing to cur­tail the use of the win­dow when it comes to Gov­ern­ment ex­pen­di­ture; by cut­ting Gov­ern­ment ex­pen­di­ture in the first place.

“Se­condly, we have un­remit­ted taxes to the tune of $2,3 bil­lion from Zimra, 50 per­cent of which pri­vate com­pa­nies have not re­mit­ted to our­selves. We will col­lect it as ag­gres­sively as we can and we will make sure that this goes to­wards clos­ing the hole with the Re­serve Bank of Zim­babwe.

“So, we have got some liq­uid­ity out there that we can use in part to cover that hole with the RBZ, but 20 per­cent of those re­mit­tances to us as Trea­sury are from paras­tatals and lo­cal au­thor­i­ties. We are aware of that. We are do­ing ev­ery­thing we can so that we can raise those funds,” Min­is­ter Ncube said.

Gov­ern­ment is sad­dled with a $16,9 bil­lion debt, of which $9,6 bil­lion con­sti­tutes ex­ter­nal debt, which is block­ing the coun­try from ac­cess­ing ex­ter­nal lines of credit, while the bal­ance is do­mes­tic and in­clude the RBZ over­draft.

Through the Tran­si­tional Sta­bil­i­sa­tion Pro­gramme (TSP) un­veiled re­cently Gov­ern­ment said it will im­ple­ment aus­ter­ity mea­sures aimed at ad­dress­ing fis­cal and debt chal­lenges for sus­tained macro-eco­nomic sta­bil­ity and growth.

Against the back­ground of yawn­ing dis­par­ity be­tween Gov­ern­ment rev­enues and its ex­pen­di­ture re­quire­ments, Trea­sury re­sorted to bor­row­ing from pri­vate sec­tor and used Trea­sury Bills as in­stru­ments to set­tle the obli­ga­tions.

While Gov­ern­ment fore­cast bud­get deficit at $1,5 bil­lion in 2017, it turned out that fore­cast was $1 bil­lion off the mark at $2,52 bil­lion, then equiv­a­lent to 16,6 per­cent of gross do­mes­tic prod­uct (GDP), es­ti­mated at $16 bil­lion last year.

The fis­cal deficit, against pro­jected rev­enue of just un­der $4bil­lion, surged to 14,7 per­cent of GDP in 2017 from 8,75 per­cent in 2016 and 2,4 per­cent in 2015.

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