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Mthuli Ncube's taxes kick in

by Staff reporter
31 Dec 2023 at 13:00hrs | Views
Zimbabweans will begin a new year tomorrow faced with a basket of new taxes, levies and fees that will push up the cost of living for many that are already struggling to make ends meet.

Finance Minister Mthuli Ncube introduced the new fees, levies and taxes in his heavily criticised 2024 budget presentation on November 30.

The taxes come into effect tomorrow.

They include increased passport fees, fuel levies, tollgate and passport fees, the corporate tax rate, presumptive taxes, car registration charges as well as a 2US cent charge per gram of sugar contained in beverages.

Ncube said revenues collected were meant to fund his $58,2 trillion budget.

The new taxes were roundly condemned and this forced Ncube to increase the budget to $60 trillion and revisit several revenue collection measures during a budget debate by MPs on December 14.

New electricity tariffs of 16,88US cents per kilowatt hour were proposed a few months after it was initially raised to 12US cents per kilowatt hour.

This means consumers will see higher energy bills beginning tomorrow.

On the wealth tax, Ncube reviewed the initial threshold of the property value that would attract a 1% tax to US$250 000, from US$100 000, to be charged annually spread over months.

Ncube hiked fees for an ordinary passport to US$200 from US$120. An emergency passport is now US$300 from US$200.

However, Ncube later proposed to slash the fees for an ordinary and emergency passport to US$150 and $250, respectively, following a public outcry.

He also reviewed downward to 50% the proposed tollgate fee increase from 100%.

Before the budget proposal, light cars were paying US$2 tollgate fees, minibuses (US$3), buses (US$4), heavy vehicles (US$5), and haulage trucks (US$10).

With the new proposals, light cars will pay US$3, minibuses (US$4,50), buses (US$6), heavy vehicles (US$7,50), and haulage trucks (US$15).

For civil servants, the US$300 Covid-19 allowances will now be taxed.

Miners will also face new royalty fees and also pay a community levy of 1% for their operations.

Ncube declined to review the 2% sugar tax, a charge of 2US cents to be charged per gramme of sugar contained in beverages despite beverage makers having engaged Treasury to review this tax.

This means consumers will see the prices of their favourite beverages becoming costlier.

A statutory reserve levy on fuel shall be calculated at the rate of US$0,05 per litre of petroleum product and at the rate of US$0,03 per litre of diesel will also be introduced.

Currently, a litre of petrol and diesel is retailed at US$1,55 and US$1,68 respectively.

The new levies will see the price of fuel going up, pushing up the cost of services, and eventually the cost of living.

Treasury has also introduced new vehicle registration fees of US$100 for cars with an engine capacity of 1 500 cc that will go into effect and US$500 for those with an engine capacity above 1500 cc.

The previous fee was US$80.

A 30% surcharge on motor vehicles with a minimum free-on-board value of US$120 000 has also been extended to the end of January.

Other measures to go into effect tomorrow will be a corporate tax rate of 25%, from 24%.

Also starting tomorrow, treasury has instructed local authorities to review levies and fees charged for their services which will be dependent on the city.

All non-registered business owners will not be able to do business with registered companies while those with an annual income of US$25 000 will be forced to register for value added tax.

According to the central bank, as of the end of last year, the country had 1 639 807 small to medium enterprise owners who ran 1 954 202 businesses.

Prominent economist Gift Mugano said the budget, which he described as "antipeople" will see an increase on almost everything from rentals to bread prices and travel costs.

"You can expect an increase in prices in the property market whether it is rentals or buying properties," Mugano said.

"Then of course, we noticed that the tollgates have gone up so we expect the cost of transport to go up whether it is for public transport or in the commercial transport services.

"And the danger of that cost drive is that you have to expect that to be transferred to commodity pricing.

"Just imagine what will be the price of bread because there is a lot of travel across cities, and you pass through the tollgates.

"Bus fares will be going up and it will hit hard on the poor who are going to rural areas and also the pensioner who will be coming into town, even the commuting public when we are going across cities."

He projected that the US dollar inflation will shoot up.

"So next year will be a very difficult year," Mugano said. "I think it will be the worst year compared to the last five years."

Veteran economist Tony Hawkins said prices were already going up and things were bound to get worse due to the projected drought.

"Prices are on the way up as we can see from the recent inflation data, and we'd expect that to continue because food prices in a drought year tend to go one way and perhaps there will be more importing of some foods and that's going to be more expensive wherever it comes from," Hawkins said.

"We must expect higher fuel prices because of the devaluation as much as anything else.

"So, all of these things lead one to think that the next year is going to be very difficult.

"It's really very hard to see any positives other than perhaps some increases in some mineral prices and perhaps increasing volumes of mineral production but for everyone else, I think we are going to feel the cold, the chill breeze of a slow-down.

"I'm not gonna call it a recession because I don't think it's going to get that bad, but at least a slowdown."

Source - the standard