The Sunday Mail
Dr Gift Mugano
The Minister of Finance and Economic Development, Professor Mthuli Ncube is expected to present the National Budget statement on 22 November, 2018.
There are a lot of expectations from Zimbabweans as well as key development partners. His task is not an easy one but at the very least, we expect him to consider tax rationalisation, rein in Government expenditure, incentivise production and provide a number of reforms.
Rationalisation of taxes
The minister must reorganise taxes with a view of making them cheaper and more efficient, which will result in increased tax revenue collection. The tourism and mining sector suffers from multiplicity of taxes.
For example, in the mining sector, the industry pays fifteen heads of taxes.
In the tourism sector, the industry pays twenty-two taxes through thirteen agencies.
This scenario makes the tax burden very heavy, thereby undermining business performance and also discouraging investments.
In addressing this anomaly, with the context of rationalisation of taxes, the Minister needs to reduce the number of tax heads paid by these sectors. At the same time, in order to reduce the cost which comes with multiple agents collecting the taxes, there is need to consider creating a single window payment platform where the payment of these taxes is done through the Zimbabwe Revenue Authority (ZIMRA).
ZIMRA will then disburse the revenue to the respective departments. This practice was successfully done in Kenya and it brought efficiency and increased revenue.
Government expenditure
The current state of affairs, where the wage bill is pocketing over 90% of the national budget, is not ideal.
President Mnangagwa played his part by reducing the Cabinet’s size.
However, Government in its entirety is still very large.
Prof Ncube must continue from where the President has left by coming up with measures to cut the workforce and progressively reduce the wage bill to 40% of the total budget.
In addition, the Minister must come up with a number of measures aimed at reducing unnecessary expenditure from Government, for example, focus areas should be on luxury cars and foreign trips.
It should be Government culture that where there are embassies, meetings must be attended by officials from the embassy, not officials from here.
lncentivise companies to
promote local production
The seed industry, millers, dairy sector and those in the food and beverages sector are supporting local production through contract farming on the back of their own financial resources.
What was missing over the years were fiscal incentives recognizing the same. In this budget statement, we would like to see the minister offering tax breaks and tax rebates for companies involved in local production.
International evidence has shown that such incentives have succeeded in promoting local production, job creation and building capacity for export.
Reforms
The budget should have comprehensive tools and financial support towards the reform agenda, which was clearly articulated in the Transitional Stabilisation Programme.
For avoidance of doubt, we would like to see the minister allocating resources aimed at supporting the implementation matrix of the TSP.
It is given that for the success of any policy, there must be resources earmarked for its implementation.
Finally, we would like to see how the minister is going to walk the talk on paying the national debt as well as how he will work in collaboration with the Reserve Bank of Zimbabwe Governor in mobilising resources from international financiers with a view of stabilising the economy.
Dr Mugano is an author and expert in Trade and International Finance. He is a Research Associate at Nelson Mandela University, Registrar at Zimbabwe Ezekiel Guti University and Director at Africa Economic Development Strategies. Feedback: Cell: +263 772 541 209. Email: [email protected]
