Tough times ahead, Zimra warns

Tough times ahead, Zimra warns
Published: 09 April 2014
Tax collector, Zimbabwe Revenue Authority (Zimra), has warned of a tough economic environment ahead as government faces shrinking revenue inflows.

Gershom Pasi, the authority's commissioner-general, told Parliament yesterday that despite surpassing the 2014 first quarter revenue target - yet to be disclosed - by two percent, Zimra is likely to miss tax income targets for the year.

"We are headed for serious shrinkage of revenue unless something is done soon to increase revenue in the country," the taxman said. "It's a miracle that we have surpassed our first quarter target... considering the current state of the economy. Things are not well out there," he said, adding that government must urgently act to stimulate local production.

Last year, Zimra collected a total revenue of $3,4 billion, six percent short of a $3,6 billion target. Government registered a budget deficit of $16,8 million in February compared to a surplus of $17,8 million in January, as revenue collections declined, further reflecting the economic slow-down.

February revenues stood at $248 million against a target of $273,3 million, resulting in a negative variance of $25,3 million. The month's expenditures amounted to $264,8 million, 58 percent of which went to government employment costs.

Value added tax contributed to the bulk of tax revenue at 33 percent, pay-as-you-earn 24 percent, excise duty 14 percent while non-tax revenue remained subdued at four percent. This comes as Zimbabwe's economy, expected to grow by 6,1 percent this year, is showing signs of stress characterised by deflation, lack of aggregate demand and a trade deficit that has widened to $3,5 billion.

The country - still recovering from a decade-long economic recession - currently relies on tax collections to fund its national budget, with the public service wage bill absorbing 73 percent of all government spending, leaving just 11 percent for capital investment and 16 percent for non-wage recurrent expenditure.
- dailynews
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