Nkosentsha Khumalo
According to Hon. Discent Bajila the Member of Parliament for Emakhandeni-Luveve Constituency, it takes no less than a whopping 25 permits to run a supermarket in Zimbabwe.
The claim was made on Wednesday during a heated debate in Parliament on the proposed 5% withholding tax on informal traders, and it raised eyebrows among the fellow lawmakers.
Hon. Bajila was advocating for a more streamlined process to make it easier for people to formalise their businesses, saying that the current requirements were a disincentive to those wishing to join the formal sector.
He argued that by making it simpler to register with Zimbabwe Regulatory Authority (Zimra), the government could attract more businesses to the formal sector and reduce the number of informal traders.
While Hon. Bajila’s claim is yet to be verified, if it is true, it could have dire consequences for the local economy.
The high number of permits required to operate a supermarket could deter potential investors, hamper economic growth, and hinder the government’s efforts to formalise the informal sector.
If informal traders have to navigate through a maze of permits, they may be less likely to formalise, leading to a loss of tax revenue for the government.
“In my view, with respect to the informal sector, we had taken a route to Ninevah, but we seem to be off ramping to Tarshish and it might be necessary for us to consider going back. The 5% withholding tax being proposed, to start with, we need to ask ourselves why these informal traders are perpetually in the informal sector and not seeking to register and normalise.
“The reason is simple. in order for you to be able to operate a supermarket lawfully in Zimbabwe, there are 25 permits that you need. It is also difficult for our people to go through the licencing until they get all the 25 permits.”
“We need to focus on making it easy for our people to officialise and to become part of the formal sector rather than to keep on saying “if you do not want to be part of the formal sector or if it is difficult for you to be in the formal sector, we will keep whipping and beating you”. This direction that we are taking will affect the local manufacturer because as Hon. Timburwa was saying, in the oil sector, it is difficult for someone to say if I cannot get oil from the local filling stations and I cannot get oil from NOIC (National Oil Infrastructure Company of Zimbabwe) let me go and get my oil in Mozambique. As an individual, it is difficult to do so. But if it is sugar, you can do that because our borders allow you to do that. It is possible for one to go and get soap, and cooking oil outside.
Honourable Bajila continued to say, “At the end of the day, the local manufacturer will suffer because the informal sector will go and buy outside the country if they find it difficult to buy locally. So, the manufacturer will lose their client base that they were having which was in the informal sector. This tax is anti-manufacturer and anti-informal trader.”
Bajila went on to emphasise the importance of considering the impact of proposed policies on all sectors of the economy, including retailers, manufacturers, and informal traders.
He argues that the chief culprits of the currency challenges faced by Zimbabwe are not being addressed adequately.
He believes that giving these sectors more time will prevent further economic instability and recommends against taking drastic actions that might cause the government to “cry”.
His overall message is that the proposed policies should be holistic and consider all the factors that affect the Zimbabwean economy
“Half the times, we come here to discuss challenges that we face with respect to our currency but the chief culprits are the wholesalers and retailers who we are coming here to defend. I am not sure why we have to take this direction without being wholesome in terms of the issues that affect our economy. I conclude by saying, letting us give our retailer, manufacturer and informal trader one more year and see what happens at the end of that one more year because the times we are getting into economically, if we start chasing after people, we are the ones who will cry again.”
“We can see what our economy is doing and the way we are moving back and forth with this kind of tax means we are going to chase goods out of shops and it is us again who are going to be seen as deliberately fighting our people.”
In response to Hon. Bajila’s claims, Deputy Minister of Finance, Economic Development and Investment Promotion, Hon. D.K. Mnangagwa, disputed the assertion that 25 permits were required to formalise with ZIMRA.
He stated that only an address and a bank account were needed, indicating that the process may not be as complex as initially thought.
Nevertheless, the debate still brings into question the feasibility of formalising informal traders and the potential impacts on the economy if the current system is not changed.
The government’s plan to implement a 5% withholding tax on informal traders was also a topic of discussion during the debate.
While some lawmakers argued that the tax would discourage informal traders from formalising and could harm local manufacturers, others contended that the revenue generated from the tax could be used to fund social and economic programs. The implications of such a policy, if enacted, would be far-reaching.
On the one hand, it could provide the government with a new revenue stream, but on the other hand, it could create an additional financial burden for informal traders, many of whom already struggle to make ends meet.
“Bajila brought up some statistics which i am not sure if they are true or not. He said that the 25 permits that he requires
to formalise I am not sure which particular industry he referred to but if it is for tax compliance, I can assure you, all you need is an address and a bank account and ZIMRA will give you BP number. It will give you your VAT (Value-Added-Tax) number.
“VAT registration, that is all you need. You do not need 25 permits to formalise with ZIMRA.”
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