By Chief Reporter
The International Monetary Fund’s (IMF) indicated Zimbabwe’s Gross Domestic Product has surged to 47 billion dollars, which is more than double the figure of 2017 at 17.58 billion dollars.
During the same period, the country’s budget remained at an average of 5.5billion with the exception of 2024 whose total budget is 7 billion dollars. According to Economist Mahwani Kangausaru, an ideal national budget is around 22- 24% of the GDP representing a 3 billion disparity in Zimbabwe’s case.
” At 47 billion GDP as was stated by IMF Zimbabwean budget should be ideally between 10.3 billion to 11,3 billion US., Zimbabwe would have had an extra 3 billion USDs to spend had we have culture of paying tax or in an environment our SMEs are formalised and pay tax, ” he said.
“Our biggest challenge now is no longer a small economy, but that, we have an economy which is failing to collect tax which reflects its size,” added the Namibian based Economist.
“Every individual in Zimbabwe who is supposed to be paying tax is not doing so, hence the huge disparity between the country’s Gross Domestic Product (GDP) and the its total budget,” says Economist Mahwani Kangausaru.
Mr Kangausaru assertion probably explains why despite Zimbabwe’s GDP officially doubling since 2018, there is little impact in the pockets of the average person.
He contends to address the anomaly, Government should ensure everyone who is supposed to pay tax, does so.
“Going forward Zimbabwe should focus on how to have everyone pay tax. What happens is, there is a group of rich guys who will deploy the masses to fight on their behalf and resist such moves. We saw it with wealth tax, the people who fought wealth tax are mostly those outside the taxable brackets or have no wealth to tax, whilst on it they forgot about taxes which affect them so much that they did not complain before approval only to do so this month on implementation.”
According to him, the argument here is not about charging high taxes or increase current rates, but that everyone who should pay tax in terms of the law has to do so.
” What people should know is that, countries with better safety nets and strong economies pay a percentage of what they get including from the little, we have many people excluded from paying tax such as most rural farmers, even employees, there is amount of salary they do not pay tax for.”
He argued against the notion that companies in Zimbabwe are overtaxed giving an example of regional counterpart Namibia were corporate tax is 32% and that same for individuals running any form of business.
“In Zimbabwe I understand, as of 1 January 2020, the effective corporate income tax rate for companies (other than mining companies with special mining leases, but including branches) was reduced to 24.72% (previously 25.75%). This rate includes a base rate of 24% plus a 3% AIDS levy.”
In short our tax for companies or individuals running businesses is 24.72 including aids levy yet Namibia is 32%. There is no basis for Zimbabwe to be viewed as Taximbabwe; rather we should educate more our people about tax.”