By Itai Zimunya.
This brief piece invites a policy conversation with your fiscal team and ZIMRA. For starters, it is prudent for one to acknowledge the tight policy rope you are treading. On one hand, the need to raise revenue to cover the fiscal gap given the ever-rising demand for public services and goods. On the other hand, the tax basket is shallow and narrow. That means more pressure to increase taxes on the limited and shallow basket. In short, very few people and corporates pay direct taxes in Zimbabwe. The majority, for some reason, do not pay direct taxes. The question then becomes- what, then is the solution?
The current trend in Zimbabwe, by both central and local authorities, is to increase the rate or introduce new taxes each time a fiscal gap is noticed. The most recent being the mandatory and multiple ZBC fees. Hwange Local Board introduced gaming levies for snooker tables. Imported cement now invites a new tax. The list of taxes goes on and on. At a local government level, people continue to be billed for water even when they do not receive the water, either at all or frequently. Motorists pay Zimbabwe National Road Authority (ZINARA) fees each time they license their vehicles. They also pay for toll gates as well as more carbon tax each time they buy fuel. We will not list some more taxes as the gist of this article is to amplify the people’s perceptions as highlighted by the AfroBarometer survey of July 2021. (https://www.afrobarometer.org/wp-content/uploads/2022/02/ad466-zimbabweans_endorse_taxation_but_have_questions-afrobarometer-22july21.pdf)
Afrobarometer surveys in Zimbabwe consistently reveal a complex view of taxation, with citizens generally recognizing the government’s right to tax while also expressing concerns about tax transparency, corruption, and the perceived burden of taxes on ordinary people. While a majority (75%) support taxation for development, many (56%) also believe the government could find alternative revenue sources. 58% opine that ordinary people pay too much in taxes. Additionally, there are perceptions of tax avoidance and 64% lack trust in tax authorities
As Zimbabwe is currently undergoing tax policy reforms as part of making Zimbabwe competitive, we, with due respect, kindly advance the idea that the Ministry takes measures to lower the levels of current direct taxes on both individuals and corporates. The gap could be covered by using technology-based systems to include the informal sector including informal miners, farmers, traders, and manufacturers in the tax system. This would mean that the few tax-compliant citizens are not punished for compliance. Secondly, the government’s huge fiscal demand must be substituted by private sector-based solutions. A key example is the rising investments in housing, schools, and medical centers by private players. This is reasonable testimony that the private sector can mobilize its independent resources to finance development without pressuring the fiscus. Thirdly, reducing taxes (both rates and quantum of taxes) would leave more money in the hands of people and corporates, hence supporting more demand and investments respectively. Fourthly, the public perception on wastage of fiscal resources is high. It is prudent for the Government to reverse Statutory Instrument 156 of 2023 by ensuring accountability in line with Chapter 17 of the Constitution by ensuring the Parliament, the people’s direct representatives, retains oversight on the Mutapa Investment Fund, which is, in short, public money. The justice of taxing people and not being accountable for their money defeats the inherent assumption of citizens’ role in governance. We, as ZITAP, call for two clear positions: a) that all citizens must pay tax without evasion, and b) that the revenues must be used efficiently and without waste. That reduces the pressure to increase taxes as Government departments would be forced to do more with fewer resources- that is, allocative efficiency.
We conclude by acknowledging the tight fiscal rope you face as a Ministry. However, we believe in taking action. As the President stated in February 2025, that -Zimbabwe ought to reform its taxation policy to make Zimbabwe competitive, we share that view. If we review our tax policy, especially reducing current rates of tax and including the non-taxed small-scale but high-volume production units, Zimbabwe can get more tax revenue and more public satisfaction, especially when Parliament’s role is reinstated in public accounts debates. Whilst this is not exhaustive, we feel that this will go a long way in creating a culture of accountability between the state and its citizens. That is the foundation of a prosperous nation. That is a driver for the dream of growth towards an upper-middle-income economy.
Itai Zimunya- a policy economist with TECA.