Zimbabwe beats Q1 tax target but company tax, mining royalties fall

HARARE (Reuters) – Zimbabwe’s tax collections were five percent above target at $897 million during the first quarter of this year but revenue from companies and mining royalties fell, the head of the national tax agency said on Sunday.

Zimbabwe finances its entire budget from taxes because lenders like the International Monetary Fund (IMF) and World Bank have said they will only resume lending to the country once it clears its debts with the global lenders.

Gershem Pasi, the Zimbabwe Revenue Authority (ZIMRA) commissioner general said in his January-March report that taxes from individuals were $200 million compared to a target of $192 million after the agency launched an assault on tax defaulters.

But revenue from companies was $71.6 million, 12 percent below target and down 32 percent from the same period last year.

Mining royalties brought in $19.6 million instead of the targeted $32.5 million, said Pasi, blaming this on low prices of platinum and gold, Zimbabwe’s two largest mineral exports.ZIMRA collected $79 million from mining royalties in the first quarter of 2014.

“Companies are facing several challenges, which include liquidity constraints, antiquated equipment, insufficient credit lines, high cost of utilities and intermittent power supplies, among many more,” Pasi said.

Zimbabwe’s economy grew 3.1 percent last year and although the government expects growth to remain the same this year, the IMF last week said the country’s prospects for 2015 remained poor, predicting weaker growth.

Several companies have closed due to lack of credit, power shortages and competition from cheaper imports, forcing workers to hawk goods for a living in the informal sector where they do not pay taxes.

Finance Minister Patrick Chinamasa said this month that Zimbabwe spends 82 percent of the total revenues raised from taxes on salaries for public workers.

The minister said the government was suspending annual bonuses for public workers due to lower revenues but was quickly overruled by President Robert Mugabe who said the payments would stay.