Biti should focus on ZIMRA and not just diamond revenue


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Finance Minister Tendai Biti presents his annual, probably last, budget on Thursday. With their obsession for elections, most people will probably be looking at whether he provides anything for elections, and how much.

But for a country that has, over the past four years, realised that it has to rely on itself rather than on donors or outside assistance, it will be more crucial to look at how Biti intends to finance his budget.

The fact that Zimbabwe has survived so far, with little help from anyone, is clear testimony that Zimbabwe can stand on its own. Yes, no country is an island, but people also have to accept reality. You have to stand on your own when you have no friends. There is no point in continuing to hope against hope unless you are delusional.

Zimbabwe was this year forced to revise its growth forecast downwards because Biti had made a gross miscalculation. His forecast revenue from taxes was slightly off the mark. Tax revenue for the first half of this year was US$1 494.1 million instead of the forecast US$1 500.2 million.

But he made a gross miscalculation on non-tax revenue, realising only $99.5 million instead of $337.7 million. And, it looks, his mistake was exaggerating diamond revenue. Yes, exaggerating diamond revenue. I call it exaggerating because Biti made a gross miscalculation of the amount he would get from the sale of diamonds.

For nearly five years, there has been an obsession about Marange diamonds and how they can generate revenue but are being misused especially by the Zimbabwe African National Union-Patriotic Front chefs and the military.

Admittedly there was smuggling of diamonds from Marange, but it is difficult to understand why such a high-flying lawyer like Biti can continue to swallow the lie being peddled especially by two non-governmental organisations- Global Witness and Partnership Africa Canada.

If they are interested in making sure that Zimbabwe benefits from its diamonds, why have these two organisations never looked at River Ranch and Murowa? Why were they so silent when De Beers was looting Marange?

Diamonds have been mined in Zimbabwe on and off since 1995, ten years before the official “discovery” of diamonds at Marange.

Why have these two organisations never looked at River Ranch and Murowa when River Ranch had the capacity to produce 500 000 carats of high quality kimberlitic diamonds a year, meaning that it could have produced 5 million carats before the discovery of Marange?

What about Murowa which came online in 2004?

No one is talking about the two mines. No one even asked whether they were KP compliant. No one has ever asked for monthly revenue contributions from River Ranch or Murowa.

The simplest explanation would be that these are run by private companies. The diamond fields at Marange are owned by a state-owned company.

Indeed, Marange deserves a lot of attention, but sight must never be lost of the fact that the diamonds are being mined by a state-owned company that is in business with private partners.

The emphasis here is that the mines are run by companies. Companies are there to make money, or precisely profits. It is from these profits that they pay dividends. So the only revenue that one can expect from a company is dividends. And no company in the world pays dividends every month. So how in the hell did Biti expect diamond revenue every month?

Even in Botswana, where the state owns half of the stake in the country’s diamond mines, no one has ever talked about the government being paid revenue every month.

Simple logic dictates that if diamond mining companies from Marange are expected to contribute revenue every month, the same should apply to the gold mining companies, the platinum mining companies, the chrome mining companies and every other company for that matter.

Biti should concentrate on earning revenue through the Zimbabwe Revenue Authority. He won’t go wrong. He must focus on making sure that Zimra gets all the revenue due to the government-from VAT which contributes nearly a third of the country’s revenue, to PAYE which it seems is only being paid by those already in the net without any new revenue sources.

Biti should make sure that everyone who gets income pays tax. That’s his job. He should also make sure that every company pays corporate tax. If not, he should ask why the company is in business.

The number of cars on Harare’s roads does not tally with the revenue Biti gets from customs duty. How are people getting so many cars into the country when the contribution of customs duty remains only 10 percent of government revenue?

There are only two possible explanations. Either they are smuggling the cars into the country, or bribing Zimra officials. Biti can address both problems.

Biti should learn from the road authority. They are making so much money from toll gates, despite the low fees and the loose system that is so open to abuse. Biti should be asking himself why Zimra is not making much more.

Of course, we should also make sure that the diamond companies, pay their taxes just like all other companies, but let us not lose focus on the main sources of government revenue, especially when it appears that someone, somewhere wants us to focus on the smaller picture .and not on the bigger picture.

After all, Mbada was the sixth largest corporate taxpayer last year according to Biti himself. He should just rope in the others, Anjin, Marange and Sino Zimbabwe.

(7 VIEWS)

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Charles Rukuni
The Insider is a political and business bulletin about Zimbabwe, edited by Charles Rukuni. Founded in 1990, it was a printed 12-page subscription only newsletter until 2003 when Zimbabwe's hyper-inflation made it impossible to continue printing.

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