9 January 2013

Zimbabwe: MPs Demand Tax Probe

LAWMKERS have demanded a probe into customs duty paid for vehicle imports, saying billions of dollars were not being accounted for through corruption.

In its end of year report, the Parliamentary Committee on Budget and Finance queried the Ministry of Finance's projected revenues of US$392 million from customs this year which do not reflect the present volume of imports to Zimbabwe.

Import duty is one of the key revenue centres for the inclusive government, which has failed to implement investor-friendly policies to generate more revenues.

Government has become heavily dependent on revenues generated through imported second hand cars, mostly from Japan.

But again, there are endemic loopholes in the collection and accountability of the duty due to corruption at the ports of entry, especially at Beitbridge.

Not only does this imply that the State is not receiving revenues due to it, but also that the purpose of these duties -- that of providing some protection to local manufacturers -- is also not being achieved.

In its reasoning, the committee said this was due to under declaration of imports or outright smuggling.

"The minister (Tendai Biti) himself alluded to this in his statement when he said that imports were expected to exceed US$8 billion in 2012 and custom duties reflected only 4,8 percent of import trade when the average customs duty was in fact 35 percent," reads part of the committee report.

"He (Biti) gave no explanation of this huge disparity and this is of great concern to the committee. If the minister's figure is right, then customs duties should exceed US$2,5 billion and this alone would transform our fiscal situation."

The committee said the anomaly should be the subject of an immediate investigation with assistance from a customs authority from a developed country since the Zimbabwe Revenue Authority does not have either the appetite or the capacity to bring the situation under control.

"In addition, consideration should be given to post importation audit at all major import houses. There is need to also consider the imposition of a requirement that importers prepay for their imports through a commercial bank and at the same time pay the required duties prior to importation being effected as this would assist in decongesting our border posts and assist with the cash flow of the State," added the report.

Also, as a measure to expand the fiscal envelope, the committee said the present range of duties on fuel imports should be reviewed and the duty regime harmonised between the different classes of refined fuel imports.

This was seen as necessary to remove the incentive to falsify fuel importation documents at the border posts, standardise the duty regime and make it easier to administer and raise significant additional revenue at no cost to the State.

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