Opinion / Columnist
'Informal sector is 70% GPD but remitting paltry 1% in taxes' - get nothing from taxing imaginary wealth, common sense
01 Apr 2021 at 16:38hrs | Views
"Shocking evidence of tax leakages hogged the limelight this week, with Finance and Economic Development minister Mthuli Ncube saying the informal sector, which makes up 70% of Zimbabwe's gross domestic product (GDP), was remitting less than 1% in taxes," wrote Eddie Cross.
"This explains why the ailing economy has been struggling with crumbling public infrastructure, while social security interventions are grounded. It also reveals how a cluster of interventions unveiled three years ago to pin the informal sector to pay taxes failed to yield results."
There is nothing shocking about the informal sector contributing only a paltry 1% in collected revenue. Most of the people in the informal sector live from hand to mouth selling tomatoes, airtime and all manner of trinkets by the roadside. Most of these people are not earning enough to pay for their basic needs and should be on social welfare support.
However, this government has revalued the informal sector for the purpose of boosting the nation's GPD and so came up with the result of 70% GDP is the informal sector. And the regime even devise ways of collecting tax from the informal sector.
So, 70% of Zimbabwe's GPD is contributing a paltry 1% in tax; this must be yet another world record!
Zimbabwe's economy shrunk by a record 50% in the period 2000 to 2008. The country's inflation peaked at 500 billion percent in 2008, a world record for a country not at war, on the back of the collapsed agricultural sector and the regime's voodoo-economic policy of printing money to bankrolling its reckless spending.
The Zimbabwe economy had been "ailing" because of decades of Zanu PF gross mismanagement and rampant corruption and the economic chaos of 2000 to 2008 delivered the knockout punch from which it has never recovered.
Indeed, it is now clear Zimbabwe's economy will never recover, as long as the country remains a pariah state ruled by corrupt, incompetent and murderous thugs who rig elections to stay in power.
The truth is there is no wealth in the informal sector and the claim it is contributing 70% GPD is just an outrageous claim. The informal sector is failing to contribute even 1% in tax revenue because you cannot collect tax from an imaginary resource much less use the imaginary tax to bankroll economic recovery.
"This explains why the ailing economy has been struggling with crumbling public infrastructure, while social security interventions are grounded. It also reveals how a cluster of interventions unveiled three years ago to pin the informal sector to pay taxes failed to yield results."
There is nothing shocking about the informal sector contributing only a paltry 1% in collected revenue. Most of the people in the informal sector live from hand to mouth selling tomatoes, airtime and all manner of trinkets by the roadside. Most of these people are not earning enough to pay for their basic needs and should be on social welfare support.
However, this government has revalued the informal sector for the purpose of boosting the nation's GPD and so came up with the result of 70% GDP is the informal sector. And the regime even devise ways of collecting tax from the informal sector.
Zimbabwe's economy shrunk by a record 50% in the period 2000 to 2008. The country's inflation peaked at 500 billion percent in 2008, a world record for a country not at war, on the back of the collapsed agricultural sector and the regime's voodoo-economic policy of printing money to bankrolling its reckless spending.
The Zimbabwe economy had been "ailing" because of decades of Zanu PF gross mismanagement and rampant corruption and the economic chaos of 2000 to 2008 delivered the knockout punch from which it has never recovered.
Indeed, it is now clear Zimbabwe's economy will never recover, as long as the country remains a pariah state ruled by corrupt, incompetent and murderous thugs who rig elections to stay in power.
The truth is there is no wealth in the informal sector and the claim it is contributing 70% GPD is just an outrageous claim. The informal sector is failing to contribute even 1% in tax revenue because you cannot collect tax from an imaginary resource much less use the imaginary tax to bankroll economic recovery.
Source - zimbabwelight.blogspot.com
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