"Indirect taxes made up of customs and excise duty have contributed 88 per cent of government revenue which means that the government has been literally sustained by beer and cigarettes. This is unacceptable," Biti said.
The newly-appointed Biti revised downwards overall revenue expectations from the 1,7 billion US dollars announced by his predecessor in January to 1 billion dollars. Biti said expenditure would top 1,9 billion dollars, therefore the budget forecasts a 43 per cent loss.
Zimbabwe is in the throes of an economic crisis that critics blame on bad governance by President Robert Mugabe administration since he came to power 29 years ago.
Economists say skewed government policies, including controversial land reform, and corruption have milked the economy of the country once regarded as the breadbasket of southern Africa.
They also blame over-expenditure due to continued printing of the now worthless and abandoned Zimbabwe dollar.
But presenting his maiden budget since Mugabe and the opposition formed a unity government, Biti said: "We are now implementing the basic law of hunting economics. What we gather is what we eat."
Biti said money supply was a problem in Zimbabwe as the country was not exporting any products and government was operating on a cash basis.