HARARE – Government surpassed its revenue collections’ target for the fourth quarter to December 2020 with five out of the eleven revenue heads performing above their quarterly targets while six heads performed below the target.
Overall revenue collection amounted to $94.4 billion, 11.3 percent ahead of the expected collections of $84.8 billion.
According to the 2020 4th quarter bulletin released by Treasury on Monday, tax revenues added up to $89.9 billion, or 95.2 percent of total revenues, while non tax revenues accounted for $4.5 billion, (4.8% of total revenues).
The revenue outturn was partly explained by the increased use of digital means of paying tax as well as ZIMRA’s efforts to plug out revenue leakages at the ports of entry and from other forms of tax evasion.
Corporate tax with $19.4 billion against target of $12.6 billion, PAYE with $14 billion against target of $12 billion and excise duty with $11 billion against target of $10.5 billion performed exceptionally well.
Several tax heads such as customs duty, VAT,tax on gross revenue, and taxes on financial and capital transactions however performed below target.
Despite failing to meet target, VAT still made the biggest contribution of $21.8 billion or 23.2 percent of the total, followed by Corporate Tax, 20.6 percent and Pay As You Earn (PAYE), 15.0 percent. Excise duty at 11.8 percent was fourth in terms of its contribution to total revenues.
Of the collected revenue, of $94.4 billion, only $77.6 billion was spent leaving a surplus of $16.8 billion.
The preliminary outturn indicates that a surplus of $20.6 billion was recorded for the whole of 2020.
According to the Treasury bulletin, total expenditure was driven by expenditure on compensation of employees, use of goods and services, grants and social benefits due to the effects of the Covid-19 lockdown measures.
“In addition, the need to improve the country’s infrastructure saw the expenditure on NonFinancial Assets being high as major projects such as the Harare – Beitbridge highway had to proceed despite the pressing needs under social protection,” reads part of the bulletin.
Compensation of employees at 36.9 percent constituted the highest expenditures during the fourth quarter followed by Non-Financial Assets or Capital Expenditure (31.5 percent) and Use of Goods and Services (12.6 percent).
Treasury said the $16.8 billion surplus will be used to service maturing TBs and for contingencies against uncertainties emanating
from natural disasters including Covid 19 resurgences.
Local borrowings, prbably through Treasury Bills amounted to $2.8 billion taking total domestic debt to $16.7 billion.
Analysts said the overall outturn is encouraging as it shows Government is living within its means despite exogenous factors such as the Covid-19 pandemic.