Taxing times in Zimbabwe

THE 2024 national budget, as unveiled by Finance minister Mthuli Ncube, introduces a series of new taxes, along with sharp hikes in fees and levies charged by government agencies.

The Treasury last week proposed to introduce new taxes to raise nearly ZW$10 trillion (US$1,7 billion) in additional revenue to fund government operations in 2024.

Prior to last week’s presentation, Treasury had undertaken tocome up with a pro-poor budget.

However, it ended up being a blueprint whose aim is to take from the poor, who are already struggling to make ends meet.

Yet this should be a period when they should expect significant relief to help the economy sail through treacherous times ahead due to what is clearly a poor 2023/2024 agricultural season.

This is why it is the first budget proposal in many decades where a combined force of business, labour, consumers, the civic society and even legislators have raised the red flag and urged Parliament to consider blocking its passage.

It will bolster government to double dipping behaviour.

Ncube failed to switch from the 2023 national budget, another anti-poor statement that further impoverish the majority of Zimbabweans.

High taxes were already taking a toll on the economy.

Those working in formal jobs were among the worst affected.

Now, they faced added obligations, including the introduction of a wealth tax and a sugar levy.

The Treasury also raised certain fuel levies, tollgate and passport fees, the corporate tax rate, presumptive taxes and car registration charges, among others. It introduced the domestic minimum top up tax.

Economist Proper Chitambara said: “The tax regime in the country is already onerous and burdensome, and so the new taxes and upward reviews in existing taxes will result in a drastic increase in the cost of accessing public services, transport and logistics, the price of fuel, and the overall cost of doing business in the country.

“The net effect will be to reduce disposable incomes, while eroding the country’s overall competitiveness.

This could also weaken the employment creation capacity of businesses”.

The new tax regime will hit a population already grappling with declining living standards, high bank charges, unbearable pain caused by economic hardships and high unemployment levels. This is worsened by the intermediated money transfer tax (IMTT), which places an additional financial burden on ordinary Zimbabweans for every transaction they make.

These are bread and butter issues that need to be addressed. We pray that Treasury will listen to concerns raised by business and the general public, who have warned that the new regime is punitive and unsustainable.

For instance, the wealth tax will push the cost of purchasing and renting residential properties.

The government needs to seriously reconsider this, or at least exempt those with only one property from this tax.

The new measures will pile fresh pressures on household budgets, in a country where more than 90% of working age people are unemployed.

Tax pressures on businesses will add another layer of complexity.

Small and medium enterprises, often the lifeblood of any economy, may find themselves particularly strained.

The potential ripple effect on employment and overall economic growth cannot be underestimated.

No investor wants to sink money in a country where taxes are some of the highest in the world.

This will hinder the inflow of crucial funds required to stimulate economic development and job creation.

There should be a critical examination of the implications of what Ncube has proposed, on various fronts.

Yes, Treasury is desperate to raise money domestically since it cannot access funding from international financial institutions.

But it must re-evaluate some of the proposals to ensure that the burden is not disproportionately placed on citizens and businesses.

While the government must secure revenue for essential public services and infrastructural development, a judicious approach to taxation is pivotal.

An overtaxed population and businesses can stifle economic growth and diminish the overall well-being of the country’s citizens.

Excessive answer.

I repeat what I stated last month that it is crucial for the government to strike a balance between generating revenue and providing relief to ordinary Zimbabweans. taxation is not the