Excise duty major revenue contributor

EXCISE duty is a major revenue contributor only coming third to value added tax (VAT) and individual tax – pay as you earn (PAYE) — in terms of percentage contribution by revenue head for the 10 months to October this year.

BATANAI MUTASA
OWN CORRESPONDENT

Total revenue collections for the 10 months to October 2014 amounted to $3,037 billion, against a target of $3,27 billion and excise duty contributed 14% of the total figure.

Local accounting firm Grant Thornton said in its budget overview that in order to widen the tax base, enhance export competitiveness and promote economic recovery, fiscal incentive schemes were being proposed to be included in the 2015 national budget.

Local-accounting-firm-Grant-Thornton

Local-accounting-firm-Grant-Thornton

The review indicated the proposal to reduce excise duty on clear beer from 45% to 40%, thereby stimulating growth in volumes.

“As a quid pro quo, alcoholic beverage manufacturers have undertaken to reduce the retail price. This measure takes effect from 1 January 2015,” it said.

In a full year trading report for 2014, Delta Beverages, the country’s largest beverages maker, said lager volumes dipped 26% for the fourth quarter to March and declined by 2% for the whole year as compared to the same periods in 2013.

The beverages firm had blamed decline in sales on poor economic performance which it said was putting significant pressure on consumer disposable incomes subsequently affecting sales.

In the overview, Grant Thornton said excise duty on cigarettes had been increased from $15 per 1 000 sticks to $20 per 1 000 sticks, with effect from December 1 2014.

A total of $684,87 million was realised for tobacco in 2014 compared to $610,31 million in 2013, at an average price of $3,17/kg compared to $3,68/kg in 2013 indicating a rise in tobacco production levels.

The 2015 budget indicated the proposed reintroduction of tobacco levy on tobacco growers at a rate of $0,015 of each dollar of the selling price, with effect from January 1 2015.

“The revenue generated will be ring-fenced to finance reforestation activities,” it said.

Fiscal authorities have, in line with the need to widen the tax base, focused on maximising on excise duty by such incentivising manufacturers to lower prices and increased volume sales and ensuring the highest realisable value is realised from sin tax.

Our Partners:   NewsDay   The Independent   TheStandard  MyClassifieds