The Zimbabwe Revenue Authority (ZIMRA) has raised concerns over revenue leakages in the mining sector, citing difficulties in monitoring small-scale miners, gold buyers and porous borders through which high-value minerals can be smuggled out of the country.
Speaking during a panel discussion at the Zimbabwe Alternative Mining Indaba on Tuesday, ZIMRA Taxation Audit Manager Davson Tshuma said the authority had about 3,000 operatives countrywide to monitor both small- and large-scale mining operations.
The discussion, hosted by the Zimbabwe Coalition on Debt and Development (ZIMCODD), in partnership with the Zimbabwe Council of Churches (ZCC) and the Zimbabwe Environmental Law Organisation (ZELO), focused on the debt crisis, taxation and mining revenues, including how Zimbabwe can secure a fair and gender-just share of its mineral wealth for development.
Tshuma said monitoring the small-scale mining sector was particularly difficult because officials often had to travel long distances into remote areas to pursue illegal miners, only to find that they had fled.
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“If we went to go after the illegal miners, we have to drive a cruiser into the bush. Maybe four guys, five guys. Normally they run away when they see us and you get to where they do the mining, you find there’s no one,” Tshuma said.
He said the cost of pursuing illegal mining could sometimes outweigh the revenue that might be recovered.
“When you come back home at the end of the day, you then start to expropriate the wage of each of the officers who would get their work out to try and collect,” he said.
Tshuma said the challenge raised questions about how Zimbabwe could bring the informal mining sector into the tax net, given the contribution of small-scale miners to gold production.
“I will then maybe prescribe and ask the authorities to look into. The first thing is, are we able to really regulate the mining sector into saying each and every person who is mining contributes to the cash,” he said.
He said the reported dominance of small-scale miners in gold production made it important to strengthen regulation across the mining and mineral-trading chain.
“Because 63 percent of gold comes from the small scale miners and 27 percent comes from the formal sector of mining. So the next question is who is buying the gold? Where is the informal centre selling the gold to?” Tshuma said.
He questioned whether existing regulations were sufficient to prevent high-value minerals from being smuggled out of the country.
“What regulations do we have for them not to be able to take the high value mineral out of the country? Or what is there to regulate the gold buyer at the end of the day?” he asked.
Tshuma also raised concerns about records kept by gold buyers, saying stronger monitoring was needed to establish who was supplying the gold and whether declarations to authorities accurately reflected transactions.
He compared the challenge facing ZIMRA with policing crime, saying the tax authority had far fewer personnel to monitor the mining sector.
“You know, I always referred to this story of saying, I presume in the country they are more than 50,000 police officers. But crime is high with 50,000 police officers. ZIMRA has just about 3,000 operatives countrywide to police the small scale, to police the large scale,” he said.
Porous borders
Tshuma also identified Zimbabwe’s porous borders as another avenue for mineral and revenue leakages.
“Apart from our borders being porous themselves, our country is landlocked. Hence being landlocked, most of the borders do not have rivers. Anyone can cross to Mozambique at any point. Anyone can cross to Botswana at any point,” he said.
He said longstanding family and social ties between communities on either side of the Zimbabwe-Botswana border made it difficult to monitor movement and collect revenue.
“Those of you who are aware of history on the southern side of the country, Botswana and Zimbabwe citizens almost share the same families. So you cross with whatever you are carrying, even with your vehicle. It is then difficult to monitor and harness revenue along the same way,” he said.
Tshuma defended ZIMRA’s role in enforcing tax laws, saying the authority’s mandate was to implement legislation rather than formulate it.
“Ourselves at ZIMRA, we do not propagate the laws. We just take the law as is. Yes, we might appear very cruel, but we are cruel in sticking to the statutes,” he said.
He urged citizens and policymakers who were unhappy with existing tax laws to push for legislative changes.
“So it’s upon you to come up with meaningful laws that are going to change because we may cry and cry,” Tshuma said.
Presumptive tax
Tshuma also explained the purpose of presumptive tax, saying it was intended to collect revenue from people and businesses operating in the informal sector.
“One of the issues mentioned by the honorable doctor was the issue of presumptive tax. For example, I don’t want to go technical, but presumptive tax is the tax. The main aim is to harness tax from each and every individual, especially the informal sector,” he said.
He questioned whether all institutions responsible for collecting components of presumptive tax were remitting the money to the appropriate authorities.
“When you pay your rent, 10 percent of it goes towards presumptive tax. When you pay to local council, when you pay to space barons, when you pay to land barons, you pay 10 percent goes there on. But now there is also the issue of honoring the 10 percent local authorities, are they honoring each space barons, are they honoring it at the end of the day,” he said.
Tshuma said government revenue was centralised, with ZIMRA responsible for collecting and remitting funds rather than determining how they were distributed.
“The other issue that we have as a nation, we have a policy that all revenue collected goes into one bin,” he said.
He said revenue collected from different sectors and points of entry was pooled together.
“I’ve heard people talking about saying bank with road is not so good. But a lot of money is being collected through the border. How the money is distributed is not my prerogative. Mine is to collect the money, hand it over,” Tshuma said.
He compared ZIMRA’s role to that of hunting dogs that pursue and catch an animal before handing it over to their owner.
Tshuma also urged business owners to take greater interest in their tax affairs instead of leaving financial responsibilities entirely to accountants.
“I’ve spoken with a lot of business people around who come to the office crying because of their debt and the like. But a lot of us, one thing that we miss, we give everything to the accountant,” he said.
“We are not even concerned to understand whether so much went to VAT, so much went to chemicals, so much went to stock. Let us have interest there on it will assist us quite a lot.”
Corruption
Tshuma identified corruption as another challenge affecting revenue collection, saying citizens sometimes facilitated corrupt practices.
“But I want to say is ZIMRA paying itself the price from one pocket to the other. We the citizens are contributing to corruption because we are the ones who are facilitating. It’s now becoming so normal,” he said.
He called for anti-corruption education to begin at an early age, arguing that society had normalised corrupt practices.
“I would suggest that from ECD children should be taught something about corruption as they grow up. I’m very serious about this,” he said.
Tshuma urged public officials and citizens to reject corrupt practices, saying tackling corruption required responsibility from both sides.
“Then it will make a difference,” he said.
Source: ZIMRA flags mining revenue leakages, tax challenges in small-scale sector — CITEZW
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