Leonard Ncube in Victoria Falls
GOVERNMENT should review downwards some of its taxes to ease the cost of doing business and attract foreign direct investment, an official has said.
Addressing delegates during a recent tax conference here, Confederation of Zimbabwe Industries (CZI)’s immediate past president, Mr Busisa Moyo, said Zimbabwe was 45 percent expensive to invest in compared to other countries in the region.
He claimed that individual tax payers were also finding it difficult to make savings because of numerous taxes whose margins are high. “There are a lot of things that affect FDI and investors invest in an economy where they produce in an effective way. If you have a low cost environment, you attract investors,” said Mr Moyo who is chief executive officer of United Refineries.
He said it was misleading to say investors were driven away by indigenisation laws but blamed high production costs instead.
“Investors do not mind indigenisation but are worried about cost of production. High excise duties repel investment. That is why even companies are choosing to import items they can produce locally,” Mr Moyo added. He said for the country to attract FDI, a certain environment needs to be created.
He said while tax was a tool for economic success, Zimbabwe was failing to plan ahead in managing its tax regime at a time when the economy is trying to survive.
Mr Moyo said high tax regimes result in creation of a variety of distortions in the economy as products carry the cost burden.
“Zimra is in a catch 22 situation as it has to collect taxes because Government needs to survive. We are stuck with a high fiscal budget while the economy is crumbling. We cannot save because we are in a high tax environment. “High taxation discourages savings. Individuals get into shops with net pay and are charged 15 percent VAT more, which reduces disposable incomes,” added Mr Moyo.