Taxing matters..

Income tax in Zimbabwe is no laughing matter, as the basic income tax rate (for the lowest incomes) is set at 45%. Given that the inflation rate is off the charts, you’d think the coffers of the Zimbabwe Revenue Authority (ZIMRA) would be bursting with gold, silver and cotton banknotes.

The reality is somewhat different.

The absurdly restrictive banking laws (which currently allow to you to withdraw ZWD 500 million out per week from your own bank account), mean that we now exist on a largely cash economy. This has been compounded by the paucity of bank notes – these days we are living in a foreign currency cash society. Even if you manage to get hold of some rare Zimbabwe dollars in cash, nobody really wants them. And there is no point getting paid into your bank account if you can’t get the money out or use it before it devalues into nothing (a matter of days at most).

So, ZIMRA limps along on like most of the resource-starved government institutions these days. A few weeks ago some friends paid their company tax bill, including stiff late payment penalties, for the past two years. Due to the recent(ish) removal of ten zeros from our currency, their total bill came to the princely sum of 8.6 Zimbabwean cents. Pleased that this amount was within the company's scarce petty cash resources, they sent someone to pay the bill in cash. Having queued at the ZIMRA offices for several hours, he was sent home in disgrace, having been accused of attempting to bribe the tax office – they only accept payment by bank transfer, not cash.

The bank charges 30 million for a transfer, a sum which the company did not actually have in their account. However, they managed to “make a plan” and ask a client to pay it on their behalf. ZIMRA wouldn’t issue the tax certificate until the transfer showed up on their bank statement – at the time 8.6 cents was worth less than a quadrillion of a US cent – far less than the ink, paper, and time involved.

I hope ZIMRA spends it wisely. They obviously need it.