Taxes sustain efficient social services

By Bernard Bwoni

Tax revenues collected as income tax, national insurance and other forms of tax are used for public spending and that means healthcare, housing, law and order, transport, environment and other public service provision. This means schools, the army, emergency services, road, railways, telecommunications and social services. It is organised markets that enables efficiencies in tax collection. In the UK the average worker sees over 22% of their income tax being spent on benefits (social services) and around 7.2% going towards funding interest payments in the nation’s debts. In the US 25% of tax goes towards national defence. For any government to fund these social services they have to collect the taxes and in other parts of the world there is follow up and tax is collected. There may be loopholes but tax is collected to boost the national revenue base. In Zimbabwe the tax loopholes are vast, there are massive gaps in tax revenue collection and ZIMRA is faced with a tall order when it comes to the job of collecting taxes. People do not like paying taxes and it is up to governments to come up with robust ways of following up on tax collection. People want their street lights working, roads build and maintained, pot holes filled, hospitals working at normal capacity, good schools for their children, those who cannot work supported by the state and servicing of national debt. All these require funding and this is where tax comes in. The Zimbabwe informal sector has grown over the last 10 years and currently over 5.8 million Zimbabweans are employed in this sector. However non-compliance with tax remittances to ZIMRA from the informal sector is rampant. Many small businesses in this sector avoid remitting their taxes to the national authorities via many unscrupulous and unethical means. It is illegal not to pay tax and many pay bribes to officials, understate their profits, shady record keeping such as having double set of records and some have resorted to temporarily closing their businesses when authorities come or finding new premises every so often. It is tax revenue that anchor social services in most countries and in Zimbabwe tapping into the large and highly lucrative informal sector will boost the tax revenue base.

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