HARARE - Government will in 2016 consider proposals to put in place a new simplified tax regime that will involve the setting up of a consolidated revenue fund (CRF), Finance minister Patrick Chinamasa told parliament on Tuesday.
He said the consideration was on the back of recommendations by the august House’s Finance portifolio committee suggesting all revenue collections be held under one base.
“…the committee recommended that a simplified tax formula be adopted and that all revenue collected be channelled to a consolidated revenue fund,” said the Treasury boss.
“My response is that this proposal could be considered in the context of the 2016 National Budget,” Chinamasa said, adding that “this also addresses concerns raised by other honourable members”.
A CRF is the term used for the main bank account of the government.
Presently, some of the money collected by the Zimbabwe Revenue Authority (Zimra) does not go to the CRF, but remains in the taxman’s coffers, a development economists say encourages corrupt tendencies.
The main sources of receipts by the CRF are taxation –mainly comprising income tax, capital gains tax, sales tax, fringe benefits tax, customs duty and excise –receipts from business undertakings and other government departmental receipts.
Apart from the Zimra collections, the parliamentary committee also requested that all money collected on behalf of government, by external sources such as the police, be remitted to the CRF.
After Chinamasa presented the Mid-term Fiscal Policy, the committee highlighted concerns over various reforms proposed in the statement.
The committee then proposed that the country adopt a simplified tax formula in an effort to enhance revenue collection, as the national tax collector missed its first half year target by six percent after collecting $1,66 billion for the first half of the year due to the shrinking formal economy, against a target of$1,76 billion.
In its presentations to Parliament on the statement, the committee stated that Chinamasa had deliberately avoided measures to address the economic situation.
“Your committee noted with concern the lack of adequate measures put in place by the Hon. Minister to address the decline in the growth of the economy, which has been revised downwards to 1,5 percent from the initial projection of 3,2 percent,” David Chapfika the committee chairperson said then.
In his review, Chinamasa increased surtax from 25 to 35 percent on second-hand cars imported five years after the date of manufacture and banned the importation of second-hand clothes effective September 1.
He also reduced royalties for small-scale gold miners from three to one percent while scrapping basic goods such as groceries from travellers’ rebates effective August 1.
He also proposed a cut in government’s wage bill which at present is taking up to 83 percent of government revenue.