Economic decline hits 'sin taxes'

HARARE - Zimbabwe's excise duty collections have been nose-diving on the back of deteriorating economic conditions, the Zimbabwe Revenue Authority (Zimra) said.

Zimra chairperson Willia Bonyongwe said revenue from excise duty in the first quarter amounted to $150,2 million against a target figure of $162,6 million as disposable incomes increasingly shrunk.

Commonly referred to as “sin tax”, excise duty is a levy by government on narrow tax base goods which include consumer or luxury type goods and services, including those goods where excessive consumption is detrimental on social, economic or environmental grounds.

“The revenue head declined by 6,33 percent when compared to $160,45 million collected in the first quarter of 2016.

“The performance of the revenue head can be attributed to low consumption of excisable products such as beer and tobacco due to the low disposable income and liquidity crisis; in the absence of a credible alternative payment system,” Bonyongwe said.

However, the Zimra boss also said the country needed to improve connectivity and hardware investment to make plastic money universally accessible and efficient as unavailability of plastic money devices had also contributed to the revenue head’s collections decline.

This comes as most alcohol beverages companies have also been recording revenue slumps, with products’ volumes softening due to cash shortages and limited alternative payment platforms.

Zimbabweans have been migrating to cheaper brands, which are smuggled to evade taxes in most cases, reflecting the country’s hostile economic conditions which have seen thousands of Zimbabweans lose jobs in the wake of massive company closures.

In the wake of the difficulties, which have seen most failing to indulge, some Zimbabweans have also begun using alternative drugs.

As the situation gets more desperate, Zimra is not the only loser, with the country seeing unorthodox high chases which have ushered in intoxicants like mixing goat manure with marijuana with locals unable to afford legit alcoholic beverages.

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