'High tax regime spooks SMEs'

MUTARE - Zimbabwe's high tax regime is spooking the $7,4 billion informal sector from formalising their businesses, shutting out government from accessing up to 5,7 million small-to-medium scale enterprises (SME).

This was said by consulting economist Gift Mugano on Tuesday at an SME formalisation strategy consultative meeting at a local hotel.

Mugano said, currently, government was getting less than two percent of the SME sector’s revenue.

The economist noted that with a bigger pool of business activities, “the cost of tax can be lower.”

He said there must be a push for the alignment of legislative instruments that affect SMEs.

“We are streamlining everything,” Mugano said.

“Formalisation must, however, bring value to everyone and everyone should even feel guilty if they fail to pay their taxes because they will be deriving direct benefits from doing so.

“It’s supposed to be a two-way process.”

Mugano said SMEs’ failure to formalise is also preventing them from growing their businesses because they continue to suffer from financial exclusion, lack traceability, and remain unorganised.

“The challenge is you cannot grow the economy when you have more than 2,8 million working in the home,” he opined.

He said if organised, SMEs have the potential to replace a significant volume of imports.”

“We can localise money circulation,” he said.

With 60 percent of SMEs in the agricultural sector, Mugano said food imports by chain supermarkets could easily be offset.

SMEs that participated in the exercise were generally agreed on the need to formalise their business ventures.

Comments (2)

I hav always said 2 departments ,zimra and small medium enterprises are a very big let down to this sector n our economy.Zimra r clueless as to what they shuld do to get good contribution from smes.They hav an I dont care atitude to them n yet they think of them to balance their books.This is bcoz zimra lacks steam,no zeal.The ministry of smes is just as docile.unimaginative.yu can see by the area wgr their offices are,kaguvi,sme 10th floor.Nowhr else r they located.Not in mbare nt at Machipisa,not at auction floors.they are a ministry to fill in the gapes occupacy in government,nt to do the job.Officials in this sleepy ministry must go to china n see how its done,dont send the minister,she is too uninterested.send youngsters wth m.b.a to asses n report bak to impliment.My sister Nyoni if she wr to be asked all the trips yu did for this ministry what did yu learn n implimented,answer will be non.So these 2 docile govenment organs r not helping at all.in every 100 small business pple,maybe only 1 knows this ministry.its far from the crowd.

viola gwena - 9 March 2016

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