Tax-free bracket stretched to $75 000 a month

The first $75 000 a month of income will now be tax-free after the proposed tax-free threshold was yesterday increased from the proposed $600 000 a year ($50 000 a month) to $900 000 a year after lobbying by parliamentarians in the National Assembly.

Finance and Economic Development Minister Professor Mthuli Ncube had proposed the $50 000 a month, twice the previous $25 000 a month, for the zero tax bracket in his supplementary budget in July presented as part of his mid-term fiscal policy statement.

But during debate for the required Finance Bill implementing his tax measures in that budget, legislators said the proposed threshold was still too low. So Prof Ncube offered the $75 000 a month. Several legislators had suggested $100 000 a month but eventually there was compromise on the $75 000.

The supplementary budget had to almost double Government spending this year as a result of higher than expected inflation, especially between May and August, and this was matched by rising revenue, also driven by inflation, since many taxes are percentage taxes and so rise with inflation.

Minister Ncube has been firm since he took office that spending must be matched by revenue, with only minute borrowings permitted on the capital budget for things that produce immediate revenue to pay off the loan.

Mberengwa North legislator Cde Marko Raidza, one of those wanting another doubling to $100 000 a month, said raising the threshold to that level would bring relief to workers.

“If you give workers this tax-free incentive of $100 000 it would go a long way in alleviating their plight and would be one way of increasing their salaries because workers are always agitating for salary increments,” Cde Raidza said.

In his debate Gokwe-Chireya legislator Cde Torerayi Moyo called on the Finance Minister to re-consider his initial proposal.

“I think the honourable minister should consider setting the threshold at $100 000 per month (or $1,2 million). I think that would make a difference to workers,” he said.

Mwenezi West representative Cde Priscilla Moyo urged Prof Ncube to widen the tax base and plug the leaks by making everyone who earns income through business pay income tax.

“A lot of people in Zimbabwe do not pay taxes when they conduct their businesses.

“There is a lot of revenue leakages in the mining sector and I do not know what you can do Hon Minister because there is a lot of potential for revenue collection from that sector. That has not been done and there must be ways in which Government can generate taxes from that sector,” she said.

Harare Proportional Representative Ms Paurina Mpariwa said the budget was supposed to cater for the poor.

“If the budget is to cater for the poor, the tax-free threshold should rise to as much as $1,5 million per annum ($125 000 a month) if it is to make something meaningful in their lives,” she said.

In his response Prof Ncube initially increased the threshold to $800 000 before adjusting it further to $900 000.

“I have listened to what the Members have said and I will make a compromise to $900 000,” he said.

He added that further adjustments would be made when crafting the 2023 budget after taking into account movements in inflation.

Buhera South legislator Cde Joseph Chinotimba thanked the minister for his compromise while Kuwadzana representative Mr Charlton Hwende echoed similar sentiments saying the minister should prioritise the plight of the poor.-herald.cl.zw