News / National
Outrage over Zim government's presumptive tax
09 Jan 2015 at 08:33hrs | Views
Driving school operators in Zimbabwe have expressed concern over Government's presumptive tax on driving schools which are outside the income tax bracket as speculation of impending fees hike for this year mount.
Driving school operators are of the view that presumptive taxes are too high and unsustainable on the back of the biting liquidity crunch.
According to the Zimbabwe Revenue Authority, Presumptive Tax legislation was introduced to broaden the revenue base in view of the increase in informal business activities.
Selected sectors of the economy were targeted to ensure the participation of informal businesses in tax payment in line with experiences of other developing countries.
Zimbabwe Driving Schools Association chairperson, Mr Kudakwashe Mudzengi on Wednesday, said that presumptive tax charged on some driving schools has left most of them out of business.
He said presumptive taxes are certainly going to trigger a fees hike from the current $4 to $10 per lesson this year.
"My experience in this business is that if the operator pays presumptive of $500,00 per Class 4 vehicle ,the operator will not be able to recoup that cost to sustain the business and instead the business will collapse considering that the figures are not close to reality.
"In fact they will have to increase lessons from an average of $4 to $10 per lesson (Class 4) but at the same time the market cannot afford such prices," said Mr Mudzengi.
He said this is in sympathy with those driving schools that are not in compliance with the Income Tax Act and according to statistics those outside the income tax bracket make the majority.
Mr Mudzengi said all driving schools in the country should comply with tax laws but presumptive tax remains unsustainable.
"Currently lessons for Class 4 are pegged at $4 while Class 2 are at $10. Business is so low that sometimes one vehicle will do $120,00 per month.
"If a driving school is running one car it becomes a challenge," he said
There are more than 200 registered driving schools in Harare.
He, however, urged all driving school operators to be formal in their conduct in order to realise economies of scale.
Driving school operators are of the view that presumptive taxes are too high and unsustainable on the back of the biting liquidity crunch.
According to the Zimbabwe Revenue Authority, Presumptive Tax legislation was introduced to broaden the revenue base in view of the increase in informal business activities.
Selected sectors of the economy were targeted to ensure the participation of informal businesses in tax payment in line with experiences of other developing countries.
Zimbabwe Driving Schools Association chairperson, Mr Kudakwashe Mudzengi on Wednesday, said that presumptive tax charged on some driving schools has left most of them out of business.
He said presumptive taxes are certainly going to trigger a fees hike from the current $4 to $10 per lesson this year.
"My experience in this business is that if the operator pays presumptive of $500,00 per Class 4 vehicle ,the operator will not be able to recoup that cost to sustain the business and instead the business will collapse considering that the figures are not close to reality.
He said this is in sympathy with those driving schools that are not in compliance with the Income Tax Act and according to statistics those outside the income tax bracket make the majority.
Mr Mudzengi said all driving schools in the country should comply with tax laws but presumptive tax remains unsustainable.
"Currently lessons for Class 4 are pegged at $4 while Class 2 are at $10. Business is so low that sometimes one vehicle will do $120,00 per month.
"If a driving school is running one car it becomes a challenge," he said
There are more than 200 registered driving schools in Harare.
He, however, urged all driving school operators to be formal in their conduct in order to realise economies of scale.
Source - The Herald
