UZA Calls for balanced approach to Zim’s economic challenges
Providence Moyo
The United Zimbabwe Alliance (UZA) has expressed concerns regarding the 2024 budget presented by Finance Minister Mthuli Ncube, arguing that the budget lacks balance and fails to address the country’s economic challenges effectively.
UZA’s statement highlights the need for a more comprehensive strategy to address Zimbabwe’s financial difficulties. The organization points to the numerous taxes alreaady in place, questioning the justification for introducing new ones. The party emphasizes the potential impact on low tax morale and the discouragement of investment in the country
“Finance Minister, Mthuli Ncube’s budget presentation leaves much to be desired. These concerns must be carefully reconsidered to ensure a more balanced and comprehensive approach to Zimbabwe’s economic challenges and the recovery efforts. Also critical is the impact of the new taxes on the low tax morale in the country after decades of wastage and at times downright plunder of tax revenue by the state. Zimbabweans have a chronically low tax morale caused by the abuse of their tax revenue. Taxation is essentially a social contract between the state and its subjects, the taxpayers, wherein the state practically attaches the property of the taxpayer and pledges in return to conscientiously use the revenue realized for the provision of public services to the taxpayers. If the state fails on its obligations in terms of this contract, low tax morale arises and the legitimacy of new taxes is seriously questionable.”
The statement also criticizes the proposed lowering of the Value-Added Tax (VAT) registration threshold. UZA believes this move would impose an undue burden on small to medium enterprises (SMEs), hindering their growth and compliance with tax obligations. They suggest maintaining the threshold for service-oriented companies while considering a reduction for non-service companies.
In the pursuit of generating more tax revenue through consumption taxes, the Minister proposed to lower the VAT registration thresholds. However, it is crucial to acknowledge the potential ramifications, particularly for small to medium enterprises (SMEs) as these are the catchment targets. We, as UZA, recommend that the VAT threshold not be decreased for service-oriented companies in particular. Doing so would impose an undue burden on these entities, hindering their ability to navigate the challenges of VAT compliance. Lowering the threshold risks impeding the growth of small startups by subjecting them to VAT obligations, especially because their unique circumstances are such that goods and services purchased for providing taxable supplies or purveyances are typically minimal. Conversely, for non-service companies, a reduction in the threshold may be considered without significant concerns. This approach allows for flexibility in adapting the VAT registration requirements based on the nature of the business, recognizing that service companies may have different capacities to manage VAT compliance, cashflows, liquidity and consequently their going concern status.”
Despite these concerns, UZA acknowledges the government’s efforts in maintaining and rehabilitating infrastructure. The organization urges the government to reconsider the budget’s shortcomings and adopt a balanced approach that addresses the country’s economic challenges effectively.
