Assignment Question

The distribution of monies for funding devolution activities at Provincial level has taken
centre stage in the provincial and district based infrastructure development thrust in
Zimbabwe. Could this be the dawn of a fiscal decentralisation trajectory? Discuss the
readiness of Zimbabwe for fiscal decentralisation in the levying, charging and collection of
taxes which are currently centralised such as value added tax and capital gains taxes.
Showing evidence of empirical research, discus your views on the above question outlining
tax policy administration issues, tax efficiency and flexibility in Zimbabwe.
Title of the paper

Fiscal Decentralisation in the levying, charging and collection of currently centralised taxes
such as Value added tax and Capital gains tax. An assessment on the readiness of Zimbabwe.

Authors

Mahwihwi Tamuka, Luckson Mavhika, Pomuri Hatidani, Chapoto Timothy, Madungo

Tatenda

Abstract

This study assess the feasibility of Fiscal decentralisation in the levying, charging and
collecting of taxes currently centralised such as Value added tax and Capital Gains tax to the
Provincial level and Rural district level. The study assess the merits and demerits of the fiscal
decentralisation and also explores the readiness of Zimbawe to fiscal decentralise. The study
also come with recommendations at the end as to whether Zimbabwe can adapt the fiscal
decentralisation or not taking into consideration its tax policies and administration at the
moment.

Keywords

Devolution, Decentralisation, Fiscal, Value added tax, capital gain tax, Efficiency, Flexibility

Introduction

Devolution refers to a situation where the central Government transfers legislative, executive,
administrative and financial decision making authority to local governments that have clear
and legally recognised jurisdictions within which they provide public services to constituents
to whom they are accountable (beris 2008). Muchadenyika (2013) also argues that an
important element of devolution is discretionary authority, which limits central government
to exercising a supervisory role where it ensures that local Government operates within
national policy. In Zimbabwe the Devolution concept was adapted as a key component of the
2013 constitution which in chapter 14, states that it is desirable to ensure the preservation of
national unity in Zimbabwe, prevention of all forms of disunity and secessionism, the
democratic participation in Government by all citizens and communities in Zimbabwe, and
that there must be devolution of power and responsibilities to lower tiers of Government in
Zimbabwe. Fiscal decentralisation refers to the devolution of powers of taxing and spending
from central government to lower levels of Government like provincial and local authorities
(De Mello and Fukasaku, 1999). Decentralization refers to the transfer of authority or power
to carry out and manage public activities or tasks from a higher to a lower level of
government, quasi-government, or non-governmental organizations. This is the underlying
assumption that relates to the dynamics of power and function in Zimbabwe's local
government system, as well as the scope of the responsible Minister's use of these powers.
This goes hand in hand with the requirements of devolution in accordance with Section 264
of the new Zimbabwean Constitution, which allows for the delegation of enabling institutions
and authorities to lower levels of government. Local administrations have the authority to
make decisions under devolution without requesting consent from the central government
(Mapuva, 2015). In every nation on earth, the central level government is in charge of
taxation. The delivery of a variety of public services to the general public, such as those
related to infrastructure for transportation, education, environmental issues, health, social and
cultural affairs, commercial issues, etc., is a responsibility increasingly assumed by
subnational governments, such as local (cities or villages) or regional (provinces, states, etc.)
governments. Subnational government spending rises as a result, increasing the need for more
financial resources to carry out the tasks assigned to them. Additionally, subnational
governments frequently have to pay for their own administrative costs, such as the salaries
(Scheerens. & Ongevalle, 2018(27)).

This study is aimed at assessing how ready is Zimbabwe to devolve the power to Provincial
and Local Authorities to levy, charge and collect taxes such as Value added tax and Capital
gains tax for the infrastructure development in their jurisdiction. These taxes are currently
centralised by the central Government.

Literature review

This section reviews the existing literature of Fiscal decentralisation and devolution of
powers to Provincial and local Authorities. It also looks at the empirical review from the
provincial and local authorities on how far has devolution of powers by the central
Government improved their fiscal space and Development and what is their assessment on
the flexibility of the Central Government to allow them to levy, charge and collect taxes such
as Value added tax and Capital gain tax in the jurisdiction.
When Zimbabwe attained independence in 1980, it inherited an institutional framework that
use local government entities for administrative and control purposes rather than to promote
self-determination, democratization and economic development. Thus development
responsibilities were concentrated at the centre, and local authorities were largely neglected.
This was due to centralized government approach which include red tape, unequal allocation
of resources and macroeconomic instability among others (Michael Tonhodzai, Tawand
Nyikadzino and Alfred G. Nhema, 2013). Zimbabwe is moving towards the fiscal
decentralisation as a possible way of improving local authorities’ efficiency, move
government closer to its people and the need to respect various relevant constitutional
provisions.

Oates (2015), states fiscal decentralization provides more accountability on the government
officials because they have a role of delivering service to the locals elected them. This view
also agreed by Jin and Zhou (2017) highlighted that local population has more incentives to
discipline local public officials and can closely watch the authorities so that local services
financed through jurisdiction’s own revenue, decentralization also lead to higher civic
participation, and improvement in the control of public officials actions because local people
have more power to control as compared to national level. Bird, & Wallick (2013) pointed
that more control over politicians stimulates the electoral accountability that leads to
efficiency in the government activities. According Oates (2016), local authorities have
capacity to adapt the outputs of public services in their constituencies more as compared to
the central government which based on the one size fits all approach. The preferences and
needs of local residents believed to be met by local authorities, rather than national
governments. Tiebout (2016), added that fiscal decentralization provides an opportunity to
individuals to find out jurisdictions that provide outputs suits their tastes (Barankay &
Lockwood, 2016). De Mello (2017) point out that information on the needs and wants of the
locals can be accessed more easily by the local authorities which are closer to them. In
essence accountability and transparency of government actions can be facilitated by bringing
the expenditure assignments closer to the sources of revenue. Jin and Zou (2017) states that
fiscal decentralization contributes to improved efficiency and a leaner government. Fiscal
decentralization can reduce government size as stated in dramatized case of Brendan and
Buchanan’s model (2016). The model highlighted that central government is a single entity
aim to maximize fiscal revenues. According to Porcelli (2019), Brennan and Buchanan
hypothesis stated that fiscal decentralization is an idea for constraining the expansionary
tendencies of governments and rectify its inefficient behaviors. Moreover, since the local
citizens seek for maximization of fiscal benefits leads to competition among jurisdictions.
Competition contribute to the cost-efficient production and supply of services hence as a
result efficiency improved. Mbau et al (2019) added that fiscal decentralization brings out
innovation since it allow local authorities to formulate and implement policies which can
improve service delivery. Oates (2016) also supported arguing that innovation is an important
aspect since local authority is free to come up with new policy approaches (for instance
taxation policies) as a result this can contribute to the provision fiscal experiments that can be
implemented at a macro stage. Bird, & Wallick (2013) also added that fiscal decentralization
allows the tax comparison policies by citizens and public services provision level offered in
their areas with those in other jurisdictions. Bordignon et al (2014) and Basely and Smart
(2017) agreed that the possibility of comparing policy requires positively correlated costs
across regions. However, there is an argument that competition among the jurisdictions may
improve the overall performance of the government. According to Maksmovska (2017) fiscal
decentralization contributes the most adequate spirit of national unity (the case of South
Africa and Uganda); play an important role in the prevention of civil wars (the case of Sri
Lanka); prevention secessionist tendencies (the case of Bosnia and Herzegovina ); it enables
democracy at the grassroots level and improvement in the support of the central
government . From the scenarios above, one can bring an argument that, fiscal
decentralization can play a vital role in the political stability in volatile political systems. It
can also argued that fiscal decentralization may not effectively lead to the economic
development, better services quality delivered, efficiency and improved responsibility but it
can also bring political benefits.

Cheema & Rondinelli (2017) had an insight that fiscal decentralization creates division
between expenditure and revenues aspects. This is because “common pool” problems,
“flypaper effect” and “soft budget constraints”. Fiscal decentralization lead to “soft budgetary
constraints”. Porcelli (2019) defined “budgetary constraints” as a concept which arise from
the fact that central government can’t rule out the bailing out of local governments in default
situations. This idea also supported by Jin and Zou (2017) highlighted that if the central
government is ready to assist indebted local governments, this can lead to the program
expansion beyond their means with less concern about the capacity to meet the costs.
Bodman (2018), in an event where local authorities expect fiscal bailout from the
government, they need to put their fiscal issues in order. This situation enables local
authorities to conduct pervasive fiscal behavior which can erode importance of fiscal
decentralization on efficiency. Jin and Zou (2017), highlighted that fiscal decentralization
experience ‘common pool problem’. This is a situation arises from a tension between those
who benefit from the services and the payers. According to Porcelli (2019) problem arises
when local authorities shift some of their costs of service provision from the local to the
central government account. When local authorities’ spending comes from revenue sharing,
they may not fully utilize their own tax bases at the expense of the national sharable revenues
(Cheema & Rondinelli, 2017). Therefore, the is situations where there is no future transfer
formula discretionary transfers tend to be allocated to local government’s that are in financial
trouble (Abachi & Salamu, 2012) ,this will create the situation where local authorities
budgets being inflated to ask an extra funding from the central government .According to
Barankay & Lockwood (2016) states that fiscal transfers may enter to fiscal discipline, for
example, the German formula for equalization states that smaller or the poor state the higher
the fiscal transfer and this can be a recipe for undermining the fiscal discipline . Thus,
“common pool” creates the environment of competition of securing larger portion of sharable
funds in form of grants and transfers from central government (Bodman, 2018). According
Jim and Zou (2017) said fiscal decentralization lead to the “flypaper effect”, a scenario which
fiscal imbalances bridged with intergovernmental grants can significantly influence
expenditures by the receiving local governments. According Jin and Zou (2017) local
governments usually have a system of spending funds transferred more than they local tax
revenues they generated. Oates (2016) added that this may lead to a “transfer dependency”
whereby the sub governments rely more on transfers rather than revenue from taxes in their
own jurisdictions. This can also cause expansion in government expenditure. Wildasin
(2014) added that fiscal decentralization can lead to an increase government expenditure. He
further highlighted that there is close relationship between intergovernmental transfers and
public debts. Transfers increase from the center may be financed by an increase in the
center’s deficit so that the central borrowing may substituted for borrowing at the
decentralized levels of government. According to (Cheema & Rondinelli, 2017) bring the
same view by reasoning that fiscal decentralization may contribute to a smaller or larger
government depending on the funding., if it is mainly funded by grants this lead to a big
government, hence decentralizing expenditure without fiscal revenues might lead to a bigger
government. Jin and Zou (2017) noted that the fact that fiscal decentralization serve the
demands from diversified preferences only applies if the supply always efficient. If there is
no economies of scale in the production of public goods and services, fiscal decentralization
may result in a larger government. According to Porcelli (2019), in relation to the Leviathan
hypothesis, competition of taxes among jurisdictions can reduce social welfare if the
assumption of rent seeking does not hold water. As highlighted by Oates (2015), fiscal
competition among local governments can distort the proper functioning of a market
economy as well as the redistributive purpose of fiscal policy (Cheema & Rondinelli, 2017).
The above scenario can enables one to comment that whilst there is a general agreement that
smaller is better according to the Leviathan hypothesis it, is difficult to assess government
efficiency using this model. Oates (2017) states fiscal decentralization affect macroeconomic
management. It has limitations on the central government’s quick adaptability in response to
economic changes, for example, when it decides to increase taxes or reduce expenditures to
deal with a financial problem like a deficit. Fiscal decentralization may bring inequality in
development as compared to fiscal centralization which has greater potential for equalization
through central government’s distributive functions. Jin and Zou (2017) also added that
corruption is more dominant at subnational levels than national level. Issues such as
corruption are common at sub national level since politicians and bureaucrats are much closer
to local citizens as a result they can easily demand more on issues like taxes and
authorizations. Moreover, Tanzi (2016) also highlighted that corruption influenced by means
collusive, since the officials and locals live and work together in the communities (Cheema &
Rondinelli, 2017). When this takes place, the public interests are negatively affected, and
decisions only favors the few elite’s thus how fiscal decentralization increase corruption
levels. De Mello (2015) noted that fiscal decentralization can increase the distance between
the center and the decentralized agencies to which fiscal responsibilities are devolved. When
important tax bases are assigned to it will be difficult to central government to monitor
efficiency on how local governments utilize their revenue sources. On the expenditure issue,
the government may not well monitor local authorities on how they spend their finances in
the provision of goods and services (Bodman, 2015).

Empirical Review
From the year 200-2008. The Movement for Democratic Change was voted into power for
many urban councils with great expectation from the electorate that they will improve the
fortunes of the local authorities. However, the performance of many local authorities like
Chitingwiza deteriorated. This was mainly because of the hyperinflationary environment in
the country during that period and this resulted in poor service delivery. There are also other
factors suggested to have contributed to the decline in service delivery such the central
government tightened its control over the local authorities to avoid the dominance of the
Movement for Democratic Change and also that the local councils leadership were involved
in underhand dealings in parceling land. This view is even seen in the current days where a
lot of interference from central government in the local authorities is hindering progress and
also the priorities of the leadership is misplaced. This then is a threat to the fiscal
decentralization as the authorities may priorities own interest if the central government is not
in control.

OBJECTIVES OF THE STUDY

 To establish pillars of fiscal decentralization

 Assessment of merits and demerits of fiscal decentralization

 To assess the readiness of Zimbabwe on fiscal decentralization

Methodology

This study is going to follow an exploration of the feasibility of fiscal decentralisation in

Zimbabwe. It will also further analyse the merits and demerits of fiscal decentralisation in a
developing country like Zimbabwe looking at its political landscape and economic
environment and the management of the resources including natural resources. The study also
uses focus discussion groups to get the views of the people on fiscal decentralisation.

Body of you discussion

The factors that influence the readiness of Zimbabwe to adopt the fiscal decentralization in
the country taxes will be charged by local government. From the obtained information the
researcher identified factors like the political environment, legal environment and economic
environment.

Provision of public goods

The main purpose of revenue collected from taxes is the provision of public goods. From the
research it is clear that the country is not yet ready for fiscal decentralization of public service
delivery since this can decrease efficiency and increase economies of scale costs considered
in the production of particular public goods. For example, the shift of public goods from
central government to small municipalities with small government officials and smaller
population can reduce efficiency.

Political environment, legal environment and economic environment

The economic environment in Zimbabwe is not yet favorable for fiscal decentralization to
take place. The environment is not conducive to leave tax management in the hands of local
government to obtain favorable results. The legal environment of Zimbabwe is centralized as
well and this shows that the process to practice fiscal decentralization may be bureaucratic.
The political tensions experienced between the local governments and the central government
in the past years is a clear evident that Zimbabwe has a long way to go in terms of fiscal
decentralization.

Taxes generate more revenue for the government

The economy is currently generating most of its revenue through taxes as a result it’s not easy
for a country which do not generating major of its revenue from exports and rely on levies
and taxes from individuals and companies cannot practice fiscal decentralization.

Improvement in efficiency through the voting with one’s feet hypothesis.

Seabright (2016), highlighted that fiscal decentralization provide voters more electoral
control over the authorities since the system enables competition across local governments
for quality public services improvements; voters may make reference of neighboring
governments performance in comparison of their local politicians competence. Boddington,
2014 also states fiscal decentralization may lead to a reduction in lobbying by interest groups
thus distorting policy choices and increasing waste of public funds.

Decentralization processes are also often accompanied by fiscal decentralization processes in

order to give subnational government’s broader responsibilities related to taxation.
Decentralization of taxation system have some positive and negative aspects as compared
to a highly centralized taxation system. Some of the positive aspects of fiscal decentralization
can be summarized as follows:
Increase Fiscal Balance

Compared to central governments, local authorities have more pressure to deliver more
public goods with fewer resources. Due to their proximity to the population, they are more
accountable, which motivates them to find more affordable ways to produce and provide
public goods. As a result, spending is decreased, which improves the fiscal balance (Sow. &
Razafimahefa., 2017).

Increase the mobilization of revenue.

Parallel to this, increased income mobilization from fiscal decentralization can further
enhance the budget balance. This argument is based on the assumption that subnational
governments have greater potential , if the intergovernmental transfer system is effectively
designed, greater incentives than the central government to reach the income, consumption,
and wealth tax bases will be achieved. Additionally, the requirement for intergovernmental
transfers from central resources declines as subnational income mobilization increases (Bird,
2010)

Create welfare values

Subnational governments have the power to respond to local residents' specific needs, which
will be seen by them and result in improvements to their welfare thus downward
accountability. Subnational governments must have control over their personnel and
inhabitants must have influence over their governments, typically through elections.
Additionally, voters must have access to information in order to assess the financial
judgments of their subnational governments (Bahl. & Bird., 2008)

Boost political effectiveness.

There are three ways that fiscal decentralization increases political efficiency which are

a) Greater local involvement in political decision-making.

 b) strengthening of democracy, both for the electorate and politicians who are more
likely to discuss social issues in a decentralized system; and
c) Subnational government serves as a check on the power of the central government
and a safeguard against authoritarianism.

However governments may be hesitant to put fiscal decentralization policies into place as a
result of resistance by concerns about losing control over crucial infrastructure development,
a potential change in the composition of public capital investments, service duplication, and
an increase in corruption (Bahl. & Bird., 2008)

Although the distribution of devolution funds to locals is one of the hallmarks of fiscal
decentralization, processes suggest that districts and provinces would have more
responsibility for spending. A subnational government's tax assignment should be correlated
with its expenditure duties, meaning that the greater the expenditure, the greater the tax
revenue and tax autonomy it should enjoy (Bird, 2010)

The following traits apply to a tax that is entirely local amongst other powers, Local
governments have the following powers:

a) They can decide whether to levy the tax or not;

b) They can specify the exact tax base and set the tax rate;

c) In the case of "direct" taxes, they can assess the tax imposed on any specific taxpayer; and
d) they can administer the tax and keep all of the money they raise.

Local taxes frequently only have some of these qualities, though, in actuality. As a result, a
local tax that is collected at the national level but whose tax base and rate are established at
the local level and whose proceeds are retained there could be included (for example, the
provincial personal income tax in Canada). In some circumstances, subnational governments
impose and collect the taxes while centrally established tax rates are used.

Most local government collection systems aim to accomplish three goals, namely; to expedite
the receipt of available funds; to safeguard the government's cash; and to keep banking costs
to a minimum. This is because fiscal decentralization entails determining their sources of
revenue, tax rates, and levels of expenditure by sub national governments. Sound local
government tax systems are also conscious of equitable issues. Unfair tax regimes are more
likely to be despised, which leads to high compliance costs. According to the equity
principle, those who are in similar situations should pay the same amount in taxes. Tax
burdens ought to be dispersed justly and fairly. This can be challenging to accomplish due to
the lack of information on various kinds of income earners in various districts and provinces.
(Prichard., Brun., & Morrissey., 2012)

Most of subnational tax systems that are currently in place in Sub-Saharan Africa originated
during the former colonial powers era. Besides the major reforms in central government tax
systems, there have not been noticeable changes in subnational tax systems in many African
countries since their independence. Some exceptions can be seen in East-Africa, which have led
to the abolishment of the so-called nuisance taxes, such as the poll (head) taxes in Tanzania and
Uganda, and to a simplification of the local government tax legislation and administration
(Fjeldst., Chambas., & j, 2014).

Municipalities in former French colonies, such as Benin, Côte d'Ivoire, Mali, and Senegal
essentially apply the ‘old four’ traditional taxes: tax on buildings, land tax, business license
and liquor license (Fjeldstad., Merima., & Katera., 2018).

In Anglophone Africa, at the local level, it is common to find property taxes (on residence
and commercial buildings), business licenses and user charges on locally provided services (e.g.
water, sewage, garbage, etc.). In rural councils, poll taxes and various taxes and fees on
agricultural production and marketing are widespread practices (Fjeldstad., Merima., &
Katera., 2018)

Zimbabwe has a large informal sector, very high self-employment rates, and low levels of
tax collection (ZIMRA, 2015, 2017, 2022). According to ZIMRA annual revenue report for
2021 presumptive tax under other taxes head has contributed an insignificant figure of 5.45%
0f the total revenue (ZIMRA 2021). Since this class of business is difficult to assess tax
payable whilst the most prevalent in some provinces and districts ((Sow. & Razafimahefa.,
2017)

Zimbabwe Revenue Authority (ZIMRA) has taken several measures to decentralize the fiscal
levying of taxes. Here are some of the notable measures:

Establishment of a Local Tax Division

ZIMRA has established a Local Tax Division that is responsible for collecting taxes at the
local level. The division is tasked with ensuring that local authorities comply with tax laws
and regulations, and it provides technical assistance and capacity building to local authorities
to enable them to collect taxes effectively. This division do regular visits on business in an
effort to collect taxes.

Introduction of Electronic Platforms

ZIMRA has introduced electronic platforms such as e-filing, e-payment, Single window
initiative platform and e-declaring to facilitate the collection of taxes. These platforms have
made it easier for taxpayers to comply with tax obligations, and they have also improved the
efficiency of tax collection. Tax payers will not need to be moving from one agency to the
other to pay tax and it can be done anytime.

Capacity Building for Local Authorities

ZIMRA has been providing technical assistance and capacity building to local authorities to
enable them to collect taxes effectively. The authority has been organizing workshops and
training sessions for local authorities to improve their tax collection and management skills.

Devolution of Tax Powers

ZIMRA has been gradually devolving some tax powers to local authorities to enhance their
capacity to collect taxes. For example, in 2019, the government devolved the collection of
presumptive taxes to the local level. This has enabled local authorities to collect taxes from
small businesses operating in their jurisdictions.

Strengthening of Tax Compliance and Enforcement

ZIMRA has been strengthening tax compliance and enforcement to ensure that taxpayers
fulfill their tax obligations. The authority has been conducting tax audits and investigations to
identify tax evaders and enforce compliance.

However, there are several challenges that need to be addressed before Zimbabwe can be
considered fully ready for fiscal decentralization in the levying of taxes. These challenges
include tax policy issues, tax administration issues, and institutional capacity.
Tax Policy Issues

One of the key challenges in Zimbabwe's readiness for fiscal decentralization is the need to
clarify tax policies. The country needs to develop clear tax policies that reflect the needs and
priorities of local authorities. This requires a thorough and inclusive consultation process
involving all stakeholders, including local authorities, business organizations, civil society
groups, and taxpayers, for example purchases are done in Zvishavane and thus the input but
tax refunds are only claimed at Kurima house in Harare thus creating a burden on one
centralized unit.

Tax Administration Issues

Another challenge is the need to strengthen tax administration at the local level. Currently,
Zimbabwe's tax administration system is centralized, with the Zimbabwe Revenue Authority
(ZIMRA) responsible for collecting all taxes. This means that local authorities lack the
capacity and expertise to collect taxes effectively. To address this challenge, the government
needs to provide technical assistance and capacity building to local authorities to enable them
to collect taxes efficiently and effectively. More so, all the revenue from every ZIMRA
province/district is put into the Consolidated Revenue Fund and awaits distribution and this
creates a red tape even when other units want to use their money they would have collected.

Institutional Capacity

Zimbabwe also needs to strengthen the institutional capacity of local authorities to enable
them to effectively manage tax collection and utilization. This requires improving the
financial management and reporting systems of local authorities, as well as enhancing their
capacity to plan and budget effectively.

In summary, ZIMRA has taken several measures to decentralize the fiscal levying of taxes in
Zimbabwe. These measures include the establishment of a Local Tax Division, introduction
of electronic platforms, capacity building for local authorities, devolution of tax powers, and
strengthening of tax compliance and enforcement. These efforts are aimed at improving tax
collection and management at the local level and enhancing the delivery of public services.
The country needs to develop clear tax policies that reflect the needs and priorities of local
authorities, strengthen tax administration at the local level, and enhance the institutional
capacity of local authorities to manage tax collection and utilization. Addressing these
challenges will enable Zimbabwe to fully realize the benefits of fiscal decentralization and
improve the delivery of public services at the local level.

Conclusion

After carrying out the research, the researcher came up with the idea that Zimbabwe is not yet
ready to devolve task of tax levying, charging and collection to local governments. The
researchers come up with conclusion after taking in to account factors for fiscal
decentralization, benefits and limitations if the accountability passed to subnational
government. The reason why the authors came up with view that the economy’s fiscal policy
is better off in the hands of central government is for equality in supply and distribution of
public goods and services to the public. This was supported by the view of various scholars
who stressed that for efficiency to be obtained, the central government should be the one
responsible for the distribution and provision of public goods and services to the public.

Recommendations

To local government

After the completion of the research, the authors recommend the system is better the way it
is. Also, the researchers recommend the current system because the government obtain most
of its revenue from tax collection. The government provide public goods and services to the
public regardless of political views, religion, and geographical location .Taking in to account
the present economic environment the country has limited activities for revenue generation
to provide public goods and services and creation of environment individuals or business
entities pay the least amount of taxes required by law and when high level of voluntary tax
compliance achieved and efficient when the tax administration's costs are low in relation to
the collected revenue the central government should remain accountable for fiscal and
monetary policy systems.

To the government
The government of Zimbabwe must continue with production of public goods and services to
the locals. The current economic, political and legal environment the government is trying all
it can to maintain tax and administrative efficiency. The central government also must seek
support from the local authorities but having an oversight role in the provision of the public
goods and services using the centralized fiscal policy system to enable equal distribution of
the services. Fiscal Decentralisation may result in the areas which are already lacking behind
in terms of infrastructure development sinking more into poverty because they will be no
opportunities to levy those taxes from. The central Government should continue to have an
oversight in distribution of funds so that they are equitably distributed according to the need
of development in the provinces and districts.

References