Published by the government of Zimbabwe
26 May 2009
editorial
Harare — THE plight of civil and uniformed servants of the State, trying to not just survive but pay their bills and educate their children on US$100 a month, shows up the desperate need for the Government to collect all taxes owed to it.
And taxes are only really fair when everyone, except the totally destitute, pays at least something, rather than letting the moderately better off carry the full load. A progressive tax system whereby the rich and bigger businesses might pay more is one thing, and acceptable. A system whereby the whole country is totally carried by a small minority is another, and quite unacceptable.
So all Zimbabweans have to realise that taxes have to be paid, and paid in full. It is totally unfair to the law-abiding for some to be allowed to cheat.
Having said that, though, there are special circumstances that the authorities need to take into account.
In the last years of the great Zimbabwean inflation, and especially in the last months before the Zimbabwe dollar became worthless, tax collection was lax. Everyone knew that taxes were basically without value by the time they were collected.
The Zimbabwe Revenue Authority did not have the resources to enforce in many cases; hyperinflation made the cost of enforcement greater than the amount that could be collected from overdue or unpaid taxes.
At the same time, and Zimra must recognise this, some tax officers were ready to accept modest bribes from tax evaders, making a lax situation worse. This has largely stopped, but the historical problem is with us yet.
So there are many people who are worried about what will happen to them if they approach Zimra and own up to their past sins and start afresh, and that can put a lot of fairly honest people, or at least people who would rather have a life without trouble, in the same boat as the deliberately dishonest.
We would suggest that a chance is given to every business person, and especially to the small businesses and informal traders, to fix themselves up without penalty.
One way would be to forget about any taxes owed before January 1 this year, with perhaps a few exceptions for large importers or businesses who were supposed to pay tax in foreign currency. Zesa and the local authorities have done this, starting everyone on a clean sheet once they switched to US dollar fees and rates.
Coupled with this could be a period, say until June 30 this year, to allow any person worried about past non-payment of taxes to call in at Zimra and sort themselves out without penalty. At least Zimra would have brought into its fold those who would prefer to be honest and would know who was supposed to pay and how much they owed.
Zimra could go further. Most of those who owe taxes are the small traders and businesses, simply because it has always been worthwhile to keep a much tighter eye on the bigger businesses.
These people need a simple way to pay their taxes and Zimra needs a cheap way of ensuring compliance, so it does not have to spend $1 000 to collect $100. The Government has done a lot to make the tax system simple at the lower end of the business spectrum with its presumptive taxes.
One way of making tax payment and tax enforcement simple in the bottom rungs of the business ladder would be to revert to an old system of having cards, with monthly stamps that could be bought from post offices.
Zimra could either hire Zimpost to sell these, and even issue the cards in the first place, or could station a junior tax officer in every post office, probably a better option since then almost everyone would have easy access to Zimra for at least simple queries and basic tax registration.
Such a system would also allow the Government and Zimra to give small traders a little time to catch up with their taxes. Perhaps by the end of June they could be no more than three months behind, by the end of the third quarter no more than one or two months behind and by the end of the year they would have to be up to date.
The Government could also look seriously at a transition tax for business people who were moving out of the presumptive tax brackets but who would find keeping complex audited company accounts expensive.
South Africa offers the smaller sole traders and the like the option of a turnover tax, a percentage of their total takings. A simple set of accounts, no more complex than needed now for calculating VAT, would suffice. Presumably in Zimbabwe this turnover tax would be the same 10 percent that larger businesses have to deduct from small businesses and handymen without tax clearance certificates.
So long as everyone understands that all business activity is taxed, and that there are no exemptions, we believe that the simplest possible collection systems will help make more people honest.
An amnesty on most pre-2009 taxes and a short period for taxpayers to regularise themselves without penalty would offer the chance for everyone to make a clean start, without any loss to the fiscus.
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It's going to take a long time for Bob and his goons to pay up the taxes which they havn't paid in the last 29 years. Collect this cash I reckon it could kickstart the \Zim economy 20 times over.
Corruption starts at the top.
What incentive is there for the Povo to pay their taxes when all they see are the chefs driving around in their mercedes and 4WDs from their fancy houses to their free week-end farms, knowing full well that they have got there through being connected and not through honest labour?
Start throwing some politburo members in gaol and dig up some of their secret bank accounts; and then perhaps people will feel like paying taxes.