Zimra revokes council accounts garnishment

The Zimbabwe Revenue Authority (Zimra) has rescinded garnishing Harare City Council accounts after Government undertook to offset the local authority's outstanding US$42 million tax bill on the strength of its own US$15,5 million debt to council.

Negotiations between the Ministry of Finance and Economic Development and Town House are scheduled to wind up soon, clearing the way for the reprieve.

It could not be immediately ascertained whether or not such an arrangement is permissible under the country's taxation laws. Last month, Zimra issued a garnishee order against council in a bid to recover the outstanding dues.

Mayor Bernard Manyenyeni and town clerk Dr Tendai Mahachi immediately engaged the ministry with a view to striking a deal.

They cited financial constraints that have seen workers go for months without salaries and service delivery decline for their inability to pay. Under the proposed deal, Government's outstanding US$15,5 million rates debt will be channelled towards paying off a portion of the taxes. A resolution on how the remaining US$27 million will be paid is expected at the close of negotiations.

Government is council's second biggest debtor after industry and commerce, which owe in excess of US$130 million.

Government owes Bulawayo City Council around US$5,6 million; Gweru US$6,7 million and Masvingo more than US$23 million. Minutes of a recent full council meeting show that council directed Mr Manyenyeni to approach Government.

"His Worship, the Mayor, advised that Government had already been engaged and that the garnishee order had since been lifted," read the minutes in part.

"Modalities for the set-off of council's obligations to Zimra and Government's indebtedness to the former were under consideration. He further stressed that council had to be compliant with its statutory obligations while the engagement process was underway."

Finance Minister Patrick Chinamasa could not be reached for comment while Zimra communications manager Mr Taungana Ndoro did not respond to questions e-mailed to him.

Harare deputy mayor Councillor Muzuva Musarurwa said council looked forward to sealing the deal.

"Government institutions such as hospitals are heavily indebted and owe council millions and all we are saying is that this money they owe us should go towards offsetting what we owe Zimra. We, however, remain hopeful that the negotiations will go smoothly and the outcome will be mutually beneficial."

Over the past few weeks, Zimra has been aggressively pursuing tax defaulters as it seeks to increase Government revenue. There have been concerns, however, especially from business, that this drive has affected operations.

Analysts have advocated mutually-beneficial arrangements, including staggered payments.