Minister Ncube welcomes debate on 2024 budget
Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube has welcomed the raging debate around some of the hot points in his 2024 National Budget Statement presented on Thursday last week.
In defending his proposals, the Treasury chief has always argued that the revenue measures were meant to mobilise domestic resources to drive domestic revenue to support key projects.
Some of the key discussion points about his $58,2 trillion budget include the proposed increase of toll fees on premium roads such as Harare-Beitbridge and Plumtree-Mutare roads, with effect from January 1, 2024.
Prof Ncube said revenue derived from the new tax measures would be remitted to the Consolidated Revenue Fund.
For transparency and accountability, the finance minister stressed that the Zimbabwe Revenue Authority (Zimra) would install a Virtual Fiscal Solution at all tollgates.
The minister also proposed a 2 US cents per gramme of sugar in beverages, which many believe will put the products beyond the reach of many. However, the minister said this was key to raising funding for equipment to treat some of the non-communicable diseases (NCDs) caused by consuming too much sugar contained in these products.
A virtual fiscal device management system is a new generation of fiscal sales data collection solution that simplifies the process of tax collection for tax authorities and enhances transparency while leaving minimum space for fraud.
The minister also proposed to introduce a wealth tax of 1 percent on the market value of residential properties valued at US$100 000 and above and a review of passport fees to US$200 for an ordinary passport and US$300 for an emergency passport.
Given Zimbabwe’s capacity to borrow from international financiers remains constrained, Professor Ncube said the need to raise and mobilise domestic financial resources towards providing basic socio-economic programmes while upholding a more equitable society without having to borrow from outside was critical.
Speaking in an interview at the COP28 2023 Climate Conference in Dubai, which ends on December 12, 2023, Minister Ncube said the ongoing exchange of views regarding the proposals created room for improvements and making the correct adjustments to these taxes.
“At this stage, these are all proposals and they will still be debated. We welcome the public debate. I welcome the public debate that is taking place out there and people are even giving us ideas on how to further fine-tune these proposals,” he said.
“We are concerned about issues of inequality and this is why wealth taxes are introduced. We are seeing increasing demands from urban areas needing support from the Central Government in terms of infrastructural development, the roads in the City of Harare and Bulawayo and other urban areas as well as the need to rebuild sewage systems, water reticulation and chemicals.
“We have to draw down a budget obviously from the Central Government to support the urban areas. So it will be good as well to use a part of this wealth tax to be able to deal with infrastructure interventions in urban areas,” said Prof Ncube.
Arguably, wealth taxes can be used as a tool to reduce economic inequality by targeting the accumulated assets of wealthy individuals and these can then provide a stable source of revenue to the Government for funding public services and other key infrastructural development projects. However, critics of wealth taxes raise concerns about their potential negative effects on savings, investment and economic growth. Issues around fraud, corruption and tax evasion are also some of the problems that might come with the introduction of these kinds of taxes where one might not be willing to pay according to how much wealth they would have accumulated.
“Currently in our proposal, those who are 70 years of age and above will not be liable for this tax, again that is up for debate as we are also aware that the average retirement age for the private sector and Government is 65 and we will take into account all those things as we debate to come up with an appropriate cut-off age,” he said.
To restore the traditional supply chain, from the manufacturer, and wholesaler to retailer, the minister also proposed that only licensed and tax-compliant operators can procure goods from manufacturers and wholesalers.-chronicle
