Zimbabwe: Treasury Urged to Raise Tax-Free Threshold

8 October 2019

Government should revise the tax-free thresholds on incomes upwards in the 2020 National Budget.

The recommendation was made by Confederation of Zimbabwe Industries president Mr Henry Ruzvidzo when he appeared before the Budget, Finance and Economic Development portfolio committee on their expectations from next year's Budget.

"The tax bands were recently reviewed to $700, we believe the levels are not sufficient to encourage spending in the economy.

"We are having challenges with the movement of our products so the tax bands have to be reviewed," said Mr Ruzvidzo.

Treasury reviewed the tax-free threshold in the Supplementary Budget presented in July.

Mr Ruzvidzo also called on Government to review the two percent intermediated transfer tax.

"While we appreciate the reasons given relating to compliance our understanding when we supported the taxation was that it was across the board and it was aimed at including the previously untaxed players in our economy.

"We believe it has run its course now as far as private tax paying sector is concerned and it really ought to be looked at because it amounts to double taxation," Mr Ruzvidzo said.

He added that a permanent solution to electricity cuts should be found.

"In light of the challenges we are facing with energy most of our members are now investing in alternatives sources of energy especially renewables like solar so we would want to recommend that incentives are made available for such investments which would otherwise have been directed towards production," he added.

Appearing before the same committee, the Zimbabwe National Chamber of Commerce chief executive Mr Christopher Mugaga also said the two percent tax was a burden to business.

"The two percent is a serious cost to us, but we will continue engaging the Ministry (of Finance) on it.

"Removing it would have been ideal, but the ministry should consider reducing it to below one percent," Mr Mugaga said.

He also urged Government to maintain policy consistency saying to instil investor confidence.

Zimra Commissioner-General Mrs Faith Mazani, however, defended the tax saying it was implemented to widen the tax base by including people in the informal sector.

"I know it is a tax which has received negative publicity in some quarters, but in our advice to the ministry or working with the ministry is that in our tax administration our major setback revenue mobilisation is that compliance has been very low," she said.

Mrs Mazani said a number of individuals, business and parastatal owed the tax body with the two percent tax covering up the deficit.

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