We are about to hit the deadline for many in the informal sector to register with Zimra and have their real taxes calculated, or else be liable to pay the huge presumptive taxes passed by Parliament in the last budget.
At the same time there are moves to at least limit vending, the night vendors being the target as these operate on pavements after the public toilets have closed and include a number of people selling illegal goods and drugs.
President Mnangagwa on Wednesday took the initiative to bring in representatives of the informal traders to a meeting at State House for a double purpose. He first wanted to make it clear that the Government was not trying to shut down the informal sector, and in fact recognised its contribution to both individual and national prosperity.
But at the same time it was now necessary to activate the policies of formalising this sector, of knowing who was in business through licensing, of moving beyond talk of markets and other infrastructure for vendors others and building these markets, and of having everyone who should be paying tax, even if just miniscule amounts, to be sharing the costs of building Zimbabwe.
The President had the balance about right. No one must be forced out of business, well at least while they selling legal products, but we cannot continue with the free-for-all that has grown up across much of the informal sector and everyone in business, even if they are just selling a bag of goods, has to follow some basic rules.
The first major test comes next week when the first payments of that list of presumptive taxes announced by Minister of Finance, Economic Development and Investment Promotion Mthuli Ncube in his budget last year, and passed by Parliament in a Finance Act just before year end, become due. This is where we see US$9 000 for a tuckshop for the first three months, along with similar sorts of taxes for half a dozen other types of business.
It is clear that hardly any tuckshops, perhaps just one or two, make a profit of almost US$12 000 a month, which probably require sales of well over US$100 000 a month. Almost all, if regularised, would pay far less and most a great deal less. Some of the smallest, under a sole trader using personal income tax rates, might pay nothing.
We believe Zimra have to be both very firm but understanding as they implement this tax. They have to send out the tax inspectors, and the tax inspectors should be a bit like City Parking marshals being armed with lengths of chain and padlocks so they can implement the Zimra powers of being bale to close a business that owes taxes.
But at the same time they should also be make it clear that so long as the non-complying business promptly registers with Zimra and submits some basic accounts on income and expenditure for the first three months, that a reasonable payment plan will be approved almost automatically and the business can re-open, now regularised. For this first clamp down there is no need for a fine for delays and no need for a fee for the padlock to be opened,
The main purpose right now is to get the businesses registered. At the same time local authorities need to get them licensed, and this could be done in association with the Zimra exercise, but with a cheap licence for a very small shop. Again we need the names, addresses and ID numbers of business owners, rather than a lot of revenue.
As we move down the line to the very smallest in the informal sector, the pavement vendors and their equivalent, we need to get them listed and licensed. There is a licence suitable for them, the old hawkers licence. A hawker does not have a fixed place where they sell stuff, and that definition includes most vendors even if they sit on the same street corner every day since they do not have a right to sit there and do not pay rent.
Again, hawkers licences were never imposed to raise revenue. They date from colonial times so that the city council and its surrounding suburban town management boards had lists of people who were selling from the street, usually vegetables from the market gardening in surrounding communal lands.
There were some conditions, like the tomatoes had to be washed, but nothing dramatic. Mainly the benefit was that there was a name, address and ID number for each hawker so that if there was some sort of problem, like contaminated food, then the council could zero in on the source and fix it. And that appears to be the first need right now.
Local authorities could set up outdoor desks under an umbrella in selected areas to sell these simple licences, to avoid having unmanageable queues at the city treasurer’s offices. For the time being, at least until alternatives were arranged, flashing the licence when municipal police turned up would protect the vendor. That would make the licences attractive with an immediate benefit.
The President, like others, is keen on seeing proper markets rather than clogged pavements. But these markets have to be properly sited, have to be large enough, have to have very low rents at least for the square metre tables, and have to access to decent sanitation and water.
Harare City Council has had stupid ideas in the past of dumping vendors kilometres away from their customers, which will not help anyone. Vendors need to be close to their customers.
A long-term solution would be to convert that huge railway reserve on the south end of the central business district into a giant transport and market hub. The railway station would be kept, although upgraded and even rebuilt as modern commuter trains started running.
The mess of old railways buildings to its west up to Seke Road would be demolished, and in their place would be built a very large central bus and kombi station, allowing the five scattered and smaller terminuses to be closed and all public transport, road and rail, to end up in a concvenient central location.
The complex would include a very large vendors market, even if this needed an extra floor on the complex. The site would be ideal as many of those who buy from vendors use public transport and they would still walk past the vendors. Security would be good and cheap. A dozen municipal guards could police the whole complex of buses and vendors, and a small team of municipal staff would collect the fees.
Kombis already pay a dollar to the touts to use a terminus, and should pay the council instead. Vendors could be charged a range of fees, but those at the very bottom wanting just a square metre should be charged a dollar, half to the council and half to Zimra. The sum is trivial but several hundred vendors a day seven days a week and we are talking about some real money.
Those, like those clothes vendors that have emerged in parts of town and are crowded near Park Street and the Simon Muzenda Street Terminus, who need more space would pay more. What we are talking about is fees that could be covered by a single sale. The starting dollar is roughly what most have to pay in transport to get into town, as no one lives on the pavements.
The private sector could be brought in, as the President suggested, although a lot of the work might have to be done in a way that just covers the costs of formalisation and markets, rather than makes profits. The huge benefits resulting from a proper and more orderly marketing, without forcing anyone out of business, would be such a large gain that a monetary profit need not be added.
What is now needed is, as the President suggested, a joint approach of the authorities in close consultation with the affected vendors, and preferably some input from those who buy from vendors, to regularise the situation.
