Speaking at a post-budget breakfast hosted by the Confederation of Zimbabwe Industries (CZI) in Harare on Friday, Biti said the budget formulation process was the result of a series of consultations and prudent measures albeit under constrained fiscal space. “It will be important for the political leadership of the country not to squander the relief given to the people of this country. We need sustainable decisions,” said Biti.
Zimbabwe is next year expected to register a 9,4% economic growth rate on the back of political stability and adherence to a cash budgeting framework among other measures.
“We need to convince our (international) partners that we are bankable, it’s all basically an issue of trust,” Biti said. He said economic growth would be curtailed if the seizure of farms and private properties continues unabated.
Developments during the first half of the year to June 2011, indicate that average capacity utilisation in the manufacturing sector improved to about 57,2% compared to 43,7% last year.
The 2012 budget is focused on themes such as growth with jobs, inclusive growth, efficient growth and sustainable growth.
Minister Biti noted in his 2012 budget presentation that most industries, particularly out of Harare, remain distressed with high unemployment levels pervading.
The unemployment rate tops 75%. Biti said the little business activity there is anchored on commercial activities of retailing; liquor undertaking, small to medium enterprises and vending all mostly supported by incomes of public servants.
The finance ministry will co-ordinate financial sector support to industry to the tune of US$60 million for a broader Industrial Revival Fund, a move which local industry lobby group, CZI commended.
Rameck Masaire, a member of the CZI standing committee on economics and banking called for restraint in penalties for companies that fail to formally register with tax authorities.
He pointed out that local companies are constrained in terms of capacity to fiscalise as wider problems that are inherent in the economy serve to hamper any such efforts.
“The problem is not about the lack of compliance but is reflective of bigger problems. We need to address practical challenges before penalising business,” said Masaire.
Minister Biti in his budget statement proposed a penalty of a maximum of US$25 per point of sale, for each day that the taxpayer remains in default with effect from the first of January 2012.
Non-compliant taxpayers would also be required to pay an additional amount of Value Added Tax (VAT) equivalent to the estimated revenue loss attributable to non-compliance with the VAT Fiscalised Recording of Taxable Transactions Regulations.
Masaire pointed out that the objectives and appeals system within the tax regime needed to be revamped while the fiscalised registers implementation still needs to be sanctioned. “We noted that there are no changes in corporate tax. The effectiveness of presumptive tax needs to be evaluated to encourage SMEs to contribute to the discussion and formalise,” said Masaire.
Biti addressed major concerns: Kanyekanye
CZI president Joseph Kanyekanye said Biti had taken critical issues raised by industry into consideration as reflected in his budget statement.
“The budget is consistent with the Medium-Term Plan, there was little political populism in this budget, it was a rational decision. We wouldn’t want more deficits on the back of consumption,” said Kanyekanye.
“As CZI, we are of the view that where there is semblance of local industry being able to supply particular products then duty on imports of the same product should be restored,” he said.
Kanyekanye also suggested the adoption of a legal basis on the tenure of the multi-currency regime that would provide comfort to people and investors in the country.