Mthuli walking the talk on budget

Zimbabwe’s overall collections and expenses for the four months showed a very balanced budget indicating that Government is now living within its means.

Data from the Reserve Bank of Zimbabwe also show that Government was disciplined in its spending and did not resort to borrowing from the central bank.

However, wage pressures and dilapidated infrastructure demand that more resources were required to get the economy through the first quarter.

Government collected a total revenue of $17,9 billion for the four months to April 2020 and spent the bulk of it on recurrent expenses such as employment costs and payment of grants.

The total revenue, was higher than the $17,1 million Treasury had targeted to collect during the period under review.

The bulk of the revenue amounting to $12 billion was from tax on goods and services while tax on income and profits contributed $5,5 billion outstripping a target of $3,8 billion. Both companies and individuals made a significant contribution to this tax head.

Of the tax on goods and services revenue, value added tax (VAT) was the biggest contributor after $4,1 billion was collected. This was, however, less than the $4,7 billion Government had anticipated to collect. The failure to meet target, despite the high levels of inflation speaks to the falling disposable incomes and the subdued consumer spending power.

Another big revenue source was fuel levy at $2,2 billion against a target of $3 billion. The shortfall could have been a result of the fuel shortages experienced in the country during the period under review.

The lockdown that was put in force in April could also have slightly played a part in the reduced uptake of fuel.

The controversial Intermediated Money Transfer Tax, commonly known as the 2 percent tax continues to be Government’s major source of income after it contributed $2,4 billion, surpassing the set target of $2,2 billion.

The country which has a huge mineral asset base only managed to collect $721 million from mining royalties.

On the expenses side, Government continues to spend more on its wage bill at $4,3 billion. This was $1 billion more than what was budgeted.

Goods and services cost the tax payer $2,3 billion although Government was cautious and spent less than the budgeted $3,6 billion.

There was also a bit on social spending with just below $1 billion having been spent. Despite the challenges brought about by the Covid-19 pandemic, the spend was less than the budgeted $1,5 billion.

There was however increased spending on the Zupco and roller meal subsidy with $479 million having been provided up from a budgeted $180 million.

Government has committed to provide cheap transport to the commuting public, but the infrastructure, buses in particular has struggled to cope with increased demand.–chroncielco.wz