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Mthuli Ncube reduces taxes

by Staff reporter
27 Nov 2020 at 17:09hrs | Views
FINANCE minister Mthuli Ncube yesterday gave struggling workers something to cheer about ahead of the festive season when he presented his 2021 National Budget in Harare - significantly easing tax thresholds and promising to recover 150 000 formal jobs which were lost due to the coronavirus pandemic.

The $421,6 billion budget, which was delivered under the theme "Building Resilience and Sustainable Economic Recovery", also projected an economic growth rate of 7,4 percent next year - after two consecutive years of decline, which will be good news for both businesses and consumers.

The Treasury chief increased the tax free threshold for workers from $5 000 to $10 000 a month, and also simultaneously widened the bonus-free tax threshold from $5 000 to a welcome $25 000.

Ncube further allocated the largest chunk of his budget to social ministries - including Health and Education - which have been experiencing myriad crises that have led to crippling industrial actions by restive civil servants.

The minister also extended a significant vote to Agriculture, as part of his efforts to shore up the government's ambitious plan to have a US$8,5 billion agricultural economy by 2025.

All this comes after ordinary Zimbabweans implored Ncube earlier this week to unveil a "people-centred" budget that would further improve their livelihoods.

"The government remains committed to improving workers' disposable income as part of the broader agenda to increase aggregate demand and savings.

"The recent salary and wage adjustments for public and some private sector employees necessitate a corresponding review in the personal income tax framework.

"I, therefore, propose to review the tax-free threshold from … $5 000 per month to … $10 000 per month.

"I, further propose to adjust the tax bands to begin at … $10 001 and end at … $250 000 per month, above which the highest marginal tax rate of 40 percent will apply.  "The above measures are effective from 1 January 2021. In addition, I propose to review upwards the bonus tax-free threshold from … $5 000 to … $25 000 with effect
from 1 November 2020," Ncube said.

This comes as labour unions have been agitating for policies that further support the current measures by authorities which have seen the economy holding steady over the past six months.

Consumer watchdogs told the Daily News soon after the budget announcement yesterday that Ncube's measures were welcome, but expected more in light of the high cost of living currently being experienced in the country.

"Though welcome, and a step in the right direction, the proposed tax relief is still very much inadequate given the cost of living. "We need more and higher relief and better pay for all workers. Currently, most workers' disposable incomes are peanuts. "The little left after tax is erased by the high cost of living," National Consumer Rights Association spokesperson, Effie Ncube, told the Daily News.

The Treasury chief also said yesterday that the economic stability that had been experienced over the past six months would continue, adding that price stagnation had helped to create a "conducive environment for the attainment of key inclusive growth objectives".

"The objectives include increased output, and hence incomes, empowerment and job opportunities, access to basic public services such as healthcare, education, social protection, water and housing.

"It also creates scope for strengthening of governance institutions and, hence, effective citizenry participation in critical decision making and implementation of policies.

"Complementary to the fiscal policy, will be tight monetary policy being pursued through a three-pronged approach to achieving price and exchange rate stability. The three-pronged approach focuses on exchange rate stability, financial sector stability and management of money supply," Ncube said further.

Explaining the government's focus on Agriculture, he said this remained critical to contributing significantly to the country's economic development.

Ncube allocated $46,3 billion to Agriculture - the third highest vote after Education which got $55,2 billion and Health at $54,7 billion.

This comes as Zimbabwe is bidding to have a US$8,5 billion agriculture economy by 2025 - as part of efforts to restore the country to its former bread basket of Africa status.

Authorities have also signed a multi-billion dollar Global Compensation Agreement with white former commercial farmers, while also announcing that all those who lost their land protected by Bilateral Investment Protection and Promotion Agreements (BIPPAs) would either be compensated or have their land titles restored.

Zimbabwe is still reeling from its chaotic agrarian reforms which were carried out two decades ago, after the late former president Robert Mugabe lost a constitutional referendum and ordered the seizure of white-owned farms as punishment for them supporting the opposition.

The shambolic land seizures, which were characterised by violence, disrupted production on the farms - leading to many years of hunger. It also led to Zimbabwe becoming a pariah state.

Ncube presented the 2012 budget on the backdrop of his recently unveiled economic blueprint, the National Development Strategy (NDS1), which kicks off on January 1 next year.

Yesterday's budget presentation also came as the economy continues to hold firm, following the recent implementation of a raft of measures - including the introduction of the foreign currency auction system in June, which has contained the once rampant forex parallel market.

Source - dailynews