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Exorbitant taxes, licenses, regulatory enforcement and fees are making it increasingly difficult for most indigenous players operating their business in Zimbabwe.
Why the president has ordered his line ministry to make sure that they make it easier for business players, it seems this call has only been heeded for international players while the local players have been under immense taxation, operational pressure and over regulation in Zimbabwe.
The Monetary Policy statement has already pronounced new methodologies to enforce the informal market to formalize their revenue channels, while they target to increase revenue collection.
By Gamuchirai Mapako
Is Taxation On the informal Sector the Answer to Zimbabwe’s Economic Predicament?
Running a business in Zimbabwe is already a hassle but now the burdens of the processes of business registration, tax registration, point of service machines (POS) and licensing, are rapidly crippling small businesses especially for those who are unable to understand the sophisticated finance language and the intricacies of what comes after.
The economic crisis in Zimbabwe together with the shrinking of job opportunities in the formal sector has seen the exponential growth of the informal sector. This change in the economy has negatively impacted the government’s ability to collect tax revenues. As a resolution, the government has moved to tax the informal sector.
During the post-cabinet press briefing, Minister of Finance and Economic Development, and Investment Promotion, Honourable Professor Mthuli Ncube, brought up the government’s plans to introduce a tax payment system that ensures every eligible taxpayer pays tax. The list of these eligible taxi payers stretches from the salon owners to the vendors on the side of the road. These individuals might not have the resources or expertise to navigate the complexities and bureaucracy that come with taxes.
The capital of Zimbabwe turning into one big mall is evidence enough of the desperation to survive for the ordinary Zimbabwean. Most people are barely making a living through hairdressing salons, barbering and several others. Taxes reduce the already limited income of informal sector workers, making it even harder for them to survive.
While some find it a commendable move, it has not been received as such by the informal sector many of whom will probably attempt to evade these taxes. Taxation evasion is bound to be huge due to lack of knowledge and information and heavy costs of compliances.
“Do these people understand the pros and cons that come with these new taxation laws”, is the real question
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