High import duty fuelling smuggling: Zimra

HARARE - Zimbabwe Revenue Authority (Zimra) is proposing to lower import duty on finished clothes to reduce smuggling and increase tax collection.

Gershom Pasi, the Zimra Commissioner General, this week told the Parliament that high import duties meant to protect local manufacturers were turning out to be counterproductive as they encourage smuggling, ultimately prejudicing the government of revenue.

“So when we say we are having high duties,  which lead people to smuggle, in order to protect the local industry, the local industry itself is actually importing finished products and there is no employment creation,” Pasi said.

“Would we not be better off opening up and allowing people to import freely so that they declare and we get some duty?”

The Zimra chief noted that clothing retailers such as Edgars, Meikles subsidiaries TM and Greatermans, Truworths and Topics imported finished clothing products in the first quarter of this year amounting to $1,3 million, $240 000, $93 000, $97 000 and $41 000 respectively.

Pasi said smuggling of clothes was rampant on the Mozambican and South African boarder with over $35 million being lost annually through leakages at Beitbridge Border Post due to poor infrastructure.

Smuggled clothes are usually sold at informal markets throughout the country and are popular with the lower end of society with little disposable incomes.

The hard-pressed southern African nation is seeking ways to increase its revenue base in an effort to meet its day to day obligations.

Total revenue collections for the first quarter amounted to $805,48 million against a target of $873,3 million and last year’s figure of $837,9 million as the contribution of value added tax and other indirect taxes declined amid an economic slow-down, statistics from Treasury show.

The latest pronouncements by the national tax collector  comes as the revival of the clothing manufacturing sector continues to face serious challenges as the importation of duty-free finished goods continues.

Players in the sector have consistently complained that Zimbabwe has become a dumping ground of low quality and cheap goods threatening the livelihoods of thousands.

The government has been called upon to invoke statutes of the World Trade Organisation to help protect the local industry.

In his 2014 National Budget, Finance minister, Patrick Chinamasa said government would impose protectionist strategies, including increasing import duty on finished products, to guard against continued flooding of imports.

“Government will be instituting measures to manage imports as well as the maintenance of an even playing field with regards to cheap imports,” he said.

However, Industry minister Mike Bimha recently lambasted protectionism measures, arguing they were protecting inefficient local firms.

“Shutting out all borders would be a brilliant idea as politicians but as government we should consider all the regional conventions we subscribe to,” Bimha said.

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