Zimbabwe: Revenue Collection Surpasses Expectations

Source from:  The Herald (Harare) 11 September 2007 09/13/2007

REVENUE collection for the half-year ending June 30 surpassed expectations with a total of $3,4 trillion having been collected against the original 2007 budget estimate of $743 billion. Minister of Finance Dr Samuel Mumbengegwi said the 2007 revenue mobilisation thrust targeted consumptive activities, widening of the tax base through introduction of presumptive tax on those outside the tax net and also tightening the tax loopholes. "The focus was also on extending tax relief and incentives, in support of the productive and export sectors of the economy," he said. According to the fiscal policy review presented by Dr Mumbengegwi last week, the above expectation revenue collection efforts were driven by exceptional performance in the revenue collection subheads. Value Added Tax contributed $1,03 trillion or 30,3 percent of total revenue as a result of the benefits from the frequent price adjustments for goods and services, and tax audits undertaken by the Zimbabwe Revenue Authority. The original estimate for the first half of the year was $232 billion. VAT on domestic goods and services contributed the lion's share, with collections of $970 billion, while imported goods and services and VAT on motor vehicles contributed $33,5 billion and $26 billion respectively. Pay As You Earn (PAYE) also surpassed the original budget estimate of $170 billion during the first half of the year, with collections amounting to $849,8 billion. This was attributed to frequent salary and wage reviews in both public and private sectors in line with the rising cost of living. Corporate tax collections, on the other hand, amounted to $961,9 billion for the period under review against an estimate of $176 billion. This was on account of additional revenue coming from higher than anticipated quarterly corporate tax payments. Customs duty collections grossed $81,7 billion, representing 2 percent of total revenue collected during the first half of the year. Excise duty raised $126,9 billion, with beer and tobacco the major contributors. The two items brought in 76 percent of total excise duty collections. Elsewhere presumptive tax amounted to $258 million against projections of $332 million. Presumptive tax was introduced to service providers such as driving schools, haulage trucks, commuter omnibus and taxi cab operators among others, to widen the tax net and ensure that all potential taxpayers contribute to the fiscus. The rates were reviewed upwards in line with inflation developments and to complement Government efforts in road maintenance. Collections in respect of non-tax revenue during the first half of the year amounted to $71,4 billion against an original 2007 budget estimate of $21,3 billion. The introduction of this tax was in line with the Government policy on cost recovery. Fees and charges for Government services were reviewed in March and June 2007. Duty collections realised US$9,6 million for the national coffers over the five months from April to August 2007. Of this, US$8,7 million was collected in US dollar terms, while other payments were in South African rands, British pounds, Botswana pula and the euro. Payment of duty in forex was introduced in by Government in April in order to allow for fair competition between imports and locally produced goods. The move was also meant to deal with increasing demand for non-essential imports in an environment characterised by foreign currency constraints. The measure has had the net effect of swaying individuals and corporates to redirect their foreign currency resources towards local productive activities. Enditem