Zimbabwe’s tax regime is more costly and disadvantageous to local businesses, in relation to comparable countries in the region, with only Mozambique being an exception.
Presenting a report at the National Economic Consultative Forum workshop last week, economic expert Dr Nyasha Kaseke said in addition to the high tax rate, there are also a myriad of levies and fees that impede the competitiveness of local businesses.
According to the National Competitiveness Report, a comparative analysis of Zimbabwe and other SADC countries revealed that Zimbabwe is 4.5 times more expensive than the next highest in the region, Malawi, when it comes to fees for obtaining an Environmental Impact Assessment Certificate.
“The multiple fees and licences include among others, Environmental Management Agency (EMA) fees, Medicine Control Authority of Zimbabwe (MCAZ) license, National Social Security Authority (NSSA), Radiation Protection Authority Zimbabwe (RPAZ) and Health Professions Authority (HPA) fees,” said Kaseke.
“A case study of a local fertiliser company showed that it pays a total of $34 905 in regulatory costs monthly.”
The World Bank Doing Business Report 2014, showed that a medium sized local business was expected to pay 35.3 percent of its commercial profit, which is 5 percent higher than what a similar company would pay in South Africa (30.1 percent) and twice as much what would be expected for a similar company in Zambia (15,1 percent).
The report also established that despite high taxes and levies, another factor affecting the competitiveness of local businesses was Zimbabwe’s fixed water charges, the least competitive in the region.
“Agriculture, abattoirs and the clothing industry are the most affected as they use a lot of water during their operations. The country’s water pricing structure is such that beyond a particular threshold water charges become punitive and hence make water expensive for these operators,” read the report.
The cost of purifying water in Harare was estimated to be nearly 700 percent more than the other cities due to high levels of pollution of the raw water resulting in the requirement of more chemicals to purify the water.
Other factors, established in the report to be hindering the competitiveness of local industries included Zimbabwe’s high costs of transportation and trade logistics, money, high labour, and the production hydroelectric power in Zimbabwe, when compared to other countries in the region.
The report was launched to provide a historic benchmarking of Zimbabwe’s competitiveness and point at the areas that need urgent attention.
The National Economic Consultative Forum said with this report, they were calling upon the operationalization of the Competitiveness Committee to spearhead the establishment of industry-specific working groups to address cross-cutting constraints to competitiveness.
“Furthermore, the report recommends the expedition in the establishment of a National Productivity Institute, to provide training and consultancy and undertake research in the area of productivity.”
Giving his endorsement to the report in a later dated, December 15, 2015, President Robert Mugabe said the report complemented other efforts taken by the government to improve the country’s business environment, including Ease of Doing Business and the 100 days Rapid Results Approach Framework. FinX
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