Parly passed taxes keep tongues wagging
THE 2024 National Budget was approved last week Thursday with amendments to Finance, Economic Development and Investment Promotion Minister, Prof Mthuli Ncube’s proposals.
Parliament passed two budget bills, that is the Appropriation Bill and the Finance Bill and with the talk surrounding proposed taxes, the final document now has adjusted taxes.
In a move to bolster its revenue and address economic disparities, treasury had proposed a 1 percent tax on houses valued more than US$100,000, much to the backlash of the citizens as they likened the tax to the unpopular colonial hut tax.
However, Mthuli recently revised the wealth tax regulations, shifting from a 1 percent levy on houses valued at least US$100,000 to a targeted approach of 1 percent on houses worth US$250,000 and more, specifically targeting non-primary resident properties.
Positive sentiments surround this revision, with analysts like Namatai Maeresera commending the government’s effort to refine its wealth tax strategy.
Maeresera highlighted: “The adjusted threshold better reflects the economic landscape, capturing a segment of the population with a more substantial financial capacity. This shift aims to create a fairer tax system, ensuring that those who can afford higher-end properties contribute proportionately to the nation’s fiscal health.”
However, not all reactions are optimistic as Gladys Mutsopotsi-Shumbambiri, another financial analyst, expresses concern about the potential impact on real estate markets and investment.
She argued that this adjustment might dissuade property investment in the country, deterring potential investors and hampering economic growth.
Mutsopotsi-Shumbambiri urged the government to carefully consider the longterm consequences on the real estate sector, emphasising the delicate balance needed to stimulate economic activity while generating revenue.
The Government defends the revision, stating that it is crucial for sustainable economic development and reducing wealth inequality. Mthuli argues that the targeted approach ensures that those with more substantial assets contribute their fair share without burdening lower-income households.
In another move aimed at addressing health concerns and boosting government revenue, treasury has been allowed to implement a sugar tax of US$0.002 on non-water liquids.
While this initiative is geared towards promoting healthier beverage choices, it is also stirring discussions within the business community, particularly among stakeholders in the sugar and beverage industries.
The tax, equivalent to US 7 cents per can of sugary drinks such as Coca-Cola, has significant implications for the sugar industry.
Mike Kamungeremu, president of the Zimbabwe National Chamber of Commerce (ZNCC), acknowledges the potential impact on manufacturers. “The increased production costs could pose challenges to businesses, urging a careful balance between promoting health and supporting economic sustainability,” he said.
Kurai Matsheza, the president of the Confederation of Zimbabwe Industries (CZI), the industry body representing manufacturers, emphasises the need for a collaborative approach.
He notes; “While the sugar tax aims to discourage excessive sugar consumption, manufacturers also face the dilemma of maintaining affordability for consumers.”
Matsheza encourages an open dialogue between the government and industry players to ensure that the tax does not unduly burden manufacturers, potentially affecting their competitiveness.
Manufacturers, in response to the sugar tax, find themselves at crossroads where they must decide whether to absorb the additional cost or pass it on to consumers through price increases. This dilemma raises questions about the potential ripple effects on consumer behaviour.
Mthuli defended the tax saying; “I want to emphasise that the introduction of the sugar tax on non-water liquids is a crucial step towards addressing the health challenges posed by excessive sugar consumption in the country.
“This tax is specifically earmarked for a cancer fund, reflecting our commitment to combating the adverse health effects associated with sugary drinks.”
Treasury notes that revenue generated from this tax will be directed towards acquiring much-needed hospital machinery and critical drugs to enhance our healthcare infrastructure.
By establishing a dedicated fund, government aims to contribute significantly to the fight against cancer and improve the overall healthcare landscape in the country.
“It is important to recognise that the sugar tax is not only a fiscal measure but a strategic initiative to mitigate the health risks posed by sugary beverages. We believe that investing in cutting-edge medical equipment and essential drugs is a proactive approach to tackling the growing incidence of health issues linked to excessive sugar consumption.
“While we understand the concerns of the industry regarding production costs and consumer prices, the long-term benefits to public health and the healthcare system cannot be understated. This tax serves as a tangible effort to prioritize the well-being of our citizens and address the increasing burden of diseases related to sugar intake,” he added.
Treasury, said they remain open to engaging with industry stakeholders to find a balanced approach that supports both public health goals and economic sustainability. The ultimate aim is to create a healthier nation while ensuring that the healthcare system is well-equipped to provide quality care to those in need.
Will higher prices for sugary beverages lead to a shift in consumer preferences towards healthier alternatives, or will it merely result in increased financial strain on consumers already grappling with economic challenges, is the question in the country.
As Zimbabwe navigates this new fiscal landscape, the sugar tax reflects a broader global trend aimed at addressing rising health concerns linked to excessive sugar consumption. Striking the right balance between public health goals and economic considerations will require ongoing collaboration between government officials, industry leaders, and consumer advocates.
Only through such dialogue can the country successfully implement measures that promote both the well-being of its citizens and the economic viability of its industries.