Bulawayo Informal Sector Decries ZIMRA Tax Targeting SMEs
Members of the informal sector in Bulawayo have expressed strong opposition to recent tax policies announced by the Zimbabwe Revenue Authority (ZIMRA) that target small and medium enterprises (SMEs).
Many individuals within the informal sector during a meeting hosted by the Bulawayo Informal Sector Working Group to discuss the impact of the Finance ministry and Zimra’s Tax Certificate measures on the business community, wholesalers, retailers and informal traders argue that they do not fully understand the implications of these policies and are calling for increased education and support in order to comply with the regulations.
Tax Policy
ZIMRA’s tax policy, announced earlier this year, has sparked a wave of concern among local entrepreneurs. The policy requires SMEs to pay taxes in line with their income and register their businesses with ZIMRA as one of the measures to protect value chain integrity and transparency and to counter unfair competition by informal traders.
Critics argue that the government needs to provide more education and support for SMEs, many of whom may not understand the complexities of tax compliance.
Stevenson Dhlamini, an economist, highlights the need for a collaborative effort between ZIMRA and small business owners: “Proper education and sensitization programs should be rolled out to ensure that every SME operating in the informal sector understands this policy and is aware of their implications.”
Hindering Growth
However, some commentators believe that the ZIMRA tax policy targeting SMEs may ultimately hinder the growth and development of small businesses.
Pumula South informal trader, Trust Mkhwananzi argues that these businesses are already struggling and need government support rather than additional burdens.
“SMEs in the informal sector have been marginalised for so long. They lack access to credit, infrastructure, and necessary resources for growth. Imposing taxes on them without providing any government assistance could prove disastrous for their survival.”
He also said that these taxes are a recipe for disaster and failure to grow of SMEs as they will hinder growth of SMEs making it difficult for them to grow and save money as small businesses.
Fending for Themselves
Other traders also pointed out that unlike formal businesses that have access to government support packages during difficult economic times, informal sector businesses are often left to fend for themselves. This lack of support raises questions about the equity of introducing taxation to an already economically disadvantaged sector.
However, many within the Bulawayo informal sector feel that the tax policy is unfair and unjustified, suggesting that it should be removed. Many vendors argue that they are not employed and do not receive any government support, therefore should not be subject to the same tax regulations as formal businesses.
In response to the views of the public, Bulawayo, Matabeleland North and Matabeleland South Micro Small Medium Enterprises advisory council member, Dumisani Ncube supported that people should be educated about these policies before they are imposed on them.
Biggest Challenge
“The biggest challenge is literacy, people need to be educated on how these things are being run,” Ncube said. He added, “I need to inform the Minister so that we try to educate people in terms of the policies, acts and how ZIMRA registrations are done.”
Bulawayo Vendors and Traders Association Executive Director and secretary for Bulawayo Informal Sector Working Group, Michael Ndiweni requested for a moratorium to enlighten people on these policies and their implications.
He said, “There is need to formally have space where there is interaction between the government and the stakeholders to clarify some of the situations.”
Ndiweni added, “We are calling for a moratorium of some sort for people to really understand what is really about.”
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