Zimra misses H1 revenue target, says economy in ‘choppy waters’

Zimra misses H1 revenue target, says economy in ‘choppy waters’

HARARE, August 1 (The Source) – Zimbabwe’s tax agency says it missed the government’s revenue collection target by six percent in the six months to June, as the economy continues to struggle.

The first half’s revenue collection was 9.31 percent lower than last year’s figure.

The southern African country, which runs on a cash budget financed almost entirely by taxes, raised $1, 65 billion against a target of $1,75 billion as “the economy continues to ride on choppy waters,” said the Zimbabwe Revenue Authority (ZIMRA) chair, Willia Bonyongwe in a statement.

Zimbabwe is currently in the throes of a deep liquidity crunch and is trying to emerge from years of international isolation. It however, needs to clear arrears of $1,8 billion to the World Bank, the International Monetary Fund (IMF) and the African Development Bank (AfDB) before it can access new credit to revive its faltering economy.

Zimra also said it had lost $356 million due to customs suppressing instruments which restricted imports in the first half of the year. Revenue forgone as a result of VAT suppressing instruments — mainly import restrictions — amounted to $16.59 million.

That figure could rise in the second half after the government gazetted Statutory Instrument 64 in June, which outlawed the importation of an array of basic commodities including finished dairy products.

Zimra said tax debt rose 33 percent to $2, 63 billion and warned of further deterioration of the economy.

The bulk of the revenue was realised from individual tax which contributed 23 percent. The tax band was however nine percent below target at $355 million.

Excise duty accounted for 20 percent of gross collections while VAT on local sales and VAT on imports contributed 18 percent and 10 percent respectively.

Mining royalties brought in $33 million against a target of $52 million. The revenue head fell 17 percent from $39 million that was collected during the same period last year.

Corporate tax declined by 13 percent to $144 million during the first half, as a result of poor compliance.

The private sector accounts for 77 percent of the tax debt, with corporate tax debt at $750 million up from $554 million at the beginning of the year.

Parastatals and local councils account for 14 percent and eight percent of the tax debt respectively.

VAT on imports in the period under review amounted to $170 million which was slightly ahead of the target of $169 million. However compared to the same period last year VAT on imports were down 21 percent from $215 million as a result of policies discouraging imports.

Customs duty declined by 15 percent from $160 million in the first half last year to $135 million.