Govt Eyes Widening Tax Base to Boost Revenue

Deputy Minister of Finance, Kudakwashe Mnangagwa

Nyashadzashe Ndoro

Chief Reporter

Government is actively exploring strategies to broaden its tax base as a primary measure to enhance revenue collection and curb tax evasion, aiming to meet the projections outlined in this year’s National Budget.

During a recent parliamentary session, the Deputy Minister of Finance, Economic Development and Investment Promotion, Kudakwashe Mnangagwa, highlighted that the Ministry’s initial focus is on establishing a tax policy and infrastructure suitable for Zimbabwean citizens.

Acknowledging that over-taxation can lead to evasion, the Deputy Minister emphasized the need to strike a balance between collecting sufficient revenue for fiscal needs and ensuring that citizens do not feel excessively burdened.

A key measure being pursued, in collaboration with other ministries, is the widening of the tax base. According to Mnangagwa, this approach will allow for the potential lowering of some tax thresholds, leading to increased and more inclusive tax collection.

“We understand that if citizens are overtaxed, they evade taxes. So, one has to find a balance between taxing people in a way that they do not feel like they are paying too much, while still collecting enough to meet our fiscal needs. We interrogate the ecosystem and try to ensure that, under the current circumstances, we have a tax infrastructure that is fit for purpose, ensuring that tax levels are not too high.

“With that said, Mr. Speaker Sir, the first measure the Ministry of Finance, Economic Development and Investment Promotion is taking—together with other ministries—is exploring how best we can widen the tax base. Widening the tax base will mean we can lower some of our tax thresholds, collect more, and be more inclusive in our tax collection measures,” the Deputy Minister noted.

The government is also prioritising digitalisation in its tax collection efforts.

The Zimbabwe Revenue Authority has reportedly implemented an online system for new and existing companies and individuals to file tax returns. This digital initiative is intended to improve financial inclusion, even for remote businesses, and enhance tax efficiency by reducing the need for physical visits to ZIMRA offices.

The Deputy Minister also underscored the importance of macroeconomic stability and increased use of the local currency in facilitating efficient tax collection, noting the inherent difficulties in collecting foreign currency held in cash.