THE economy is reeling in doldrums with the latest Zimbabwe Revenue Authority (ZIMRA)’s, first quarter of 2016 figures showing company tax revenue contributions to the fiscus plunge 26,59% to US$52,5 million down from US$ 71,6 million collected same period last year- an indication of a contracting economy.
Zimra’s net revenue collections for the first quarter of 2016 at US$ 724,8 million were 15,9 % down the US$861,83 target.
The net collections was 9, 75% lower from Q1 2015.
Company closures has been inrcreasing due to low local demand, competition from imports, high cost of doing business , capital constrains and antiquated machinery with at least 81 companies shutting down in the first quarter of 2016.
Indicative of company’s struggling, industrial capacity utilisation is currently stuck at 34, 2 %.
Corporate income tax debt stood at US$751, 80 million at the end of the first quarter of 2016, up from the US$481, 55 million recorded at the end of 2015 as company continue to default in paying tax.
Revenue authorities said the underperformance of the revenue head is largely blamed on the prevailing harsh economic environment, as well as tax evasion and under declaration of profits.
“Zimbabwe’s economy is obviously going through troubled waters .The economy requires a big push to stimulate it sustainably,” Zimra chairperson Willia Bonyongwe said in a statement.
She added: “Efforts are being made to attract foreign direct inflows but in the meant time there is much Zimbabweans should do by themselves. Firstly- to curb all unnecessary consumption imports and concentrate on increasing productive capacity with the resources available.”
While President Robert Mugabe in February said out of the US$15 billion that could have been gained during diamond mining activities only US$2 billion was collected ,mining royalties closed the quarter with collections of a mere US$13,39 million against a variance of US$24,50 million ,resulting in a negative variance of 45,33%.
Customs duty collections declined by 13, 6% from US$78,34 million in Q1 (2015) to US67,99 million in Q1 (2016).
The revenue blamed the poor performance of the revenue head on twins reasons of the introduction of conformity based commodity assessment which became effective early March this year and government policies introduced in 2015 to deter the importation of specified products to protect the local industry.
Vat on imports collections was US$83,69 million ,which is 99,52 % of the targeted US$84,10million. However compared with Q1 2015 figure of US$105,56 million the collected revenue declined by 20,72 % in 2016.
Vat on local sales grew by 21, 59 % from the US$107, 82 million in Q1 2015.
The bulk of the revenue for 2016 was realised from individual tax contributing US$167, 4 million which is 23, 10% of total revenue collected.
Excise duty amounted to US$160,45 million representing a 89,59% of the targeted US$179,08 and a 2,9% slump from the US$165,4 million collected in Q1 2015.
A drought season adversely impacts on the whole economy because of the intricate linkages between the agricultural sector and the rest of the economy.
“This can be largely attributed to the economic environment which has remained harsh, even worsened by the shift in the rainy season, and the inadequate rainfall due to the elnino phenomenon,” Bonyongwe said.