High expectations for 2017 national budget Minister Patrick Chinamasa
Minister Patrick Chinamasa

Minister Patrick Chinamasa

Oliver Kazunga, Senior Business Reporter
AS Finance and Economic Development Minister Patrick Chinamasa prepares to present the 2017 national budget on Thursday, expectations are high that it would be anchored on incentivising the productive sector to spur economic growth.

The fiscal policy statement comes at a time when the country continues to experience budget deficits as money spent on imports outweighs revenue from exports.

Against this background, analysts said yesterday Treasury’s focus should be on growing the national cake through a number of policy measures aimed at incentivising the productive sector.

Economist, Dr Gift Mugano said given the prevailing economic climate, Minister Chinamasa should in the 2017 national budget announce measures that stimulate production in anchor companies.

“Such anchor companies, for example include Delta, Nestle Zimbabwe and National Foods . . . support agricultural activities through outgrower schemes. The contract farming system benefits a number of people across the value chain. As a result, the Government should look at how such companies can be incentivised through tax incentives,” he said.

“In the past, we have seen the Government targeting to raise its revenue through corporate tax, which in my view given the general economic performance, the focus should now be on improving revenue collections through Value Added Tax (VAT).”

Dr Mugano noted that unlike VAT, which is generated daily from consumption of goods, corporate tax is collected once in a year.

Consequently, he said corporate tax revenue was bound to continue depleting considering that businesses were closing down as well as downsizing on the back of the prevailing difficult economic climate.

“The Government should look at ways to improve revenue coming through VAT unlike focusing on corporate tax as a major source of revenue. For example, in other countries such as Kenya, 50 percent of their revenue in the national budget comes through VAT whereas in Zimbabwe, VAT contributes about 20 percent of our national budget revenue,” he said.

Another economist Mrs Wendy Mpofu said the minister should also look at promoting growth in the mining sector by reducing multiple taxes miners were required to pay.

She said the taxes such as capital gains, environmental levies, and royalties impacted negatively on the performance of the mining industry.

“To stimulate productivity in the mining sector, the Government in the upcoming budget should devise strategies to eliminate the multiple tax regime currently obtaining.

“A number of mining houses are being choked as far as raising operational output [is concerned] due to a multiplicity of taxes they are asked to pay. And given such a situation, attraction of foreign direct investment in the country is likely to be minimal,” said Mrs Mpofu.

Dr Bongani Ngwenya, a lecturer at Solusi University’s Faculty of Business Studies said:

“If he (Minister Chinamasa) can focus on the attempt to revamp production and infrastructural development the economy can get sustained in the upcoming year because as things stand, there is really nothing tangible that we can say creates hope that in 2017 we are going to see an improvement in economic performance.”

He said next year’s budget should be responsive in reducing recurrent expenditure by adopting structural reforms necessary in enhancing economic growth across key macro-economic sectors.

“Presently, the economy is in a precarious position as Government revenues are shrinking. We need to boost our productive sector. However, I am not sure how feasible this is going to be,” he said.

@okazunga

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