Godfrey Marawanyika/Thomas Mutswiti
FOR a government which claims to have the economically disadvantaged at heart, the $6,6 trillion supplementary budget presented by Finance minister Herbert Murerwa this we
ek is a slap in the face for ordinary citizens as they will now have to dig dipper into their coffers.
Murerwa skirted any measures to curtail run-away government expenditure, instead opting for deficit financing by raising $1,6 trillion from the already squeezed financial markets.
This measure is projected to raise the budget deficit to 8,7% of the gross domestic product.
So desperate has been the government for quick cash that it will now levy surtax on cellphone airtime, commuter and taxi operators.
Apparently for political expediency’s sake, government continued with its jobs-for-the-boys approach. The Senate will be given $30 billion to conduct its elections.
The minister introduced a host of taxes including widening the tax base to cover already cash-strapped parastatals.
Parastatals have been called upon to review service fees to economic levels in a bid to lessen the burden on the fiscus.
The informal sector whose operations were almost blown to extinction by Operation Murambatsvina are now regarded as a source of tax revenue.
This was long overdue given that about 75% of the economy was operating underground.
Small-scale miners were also not spared and will have to pay 5% presumptive tax.
The levels of corruption, particularly at the ports of entry, are a cause for concern but Murerwa just talked of revision of strategies by Zimra to permanently deal with it.
The Anti-Corruption Commission was sworn in last week and all Minister Paul Mangwana has managed to do is gobble $300 billion of taxpayers’ money.
The Look East policy seems to be pinching the revenue base – albeit mildly. To minimise forex pressures due to spare parts need, Murerwa prescribed the use of yet another tax to address the problem.
Car dealers who were complaining of low business levels will now sing the blues as all vehicles five years old and above will now attract a surtax of 25%.
In South Africa, used cars are completely outlawed.
In a move that is set to hit mobile phone users hard, a special VAT rate of 22,5% will be levied on airtime.
Speculation is rife that Econet and Net*One have proposed 180% and 250% tariff increases respectively, yet government rhetoric is the promotion of telecommunication levels.
Imported beer and cigarettes now attract a surtax of 50%. Surtax on other luxury goods has been pegged at 15%.
Given the problems that passenger transport operators are facing due to lack of forex to buy spare parts and biting fuel shortages, the introduction of presumptive tax can only be the final blow to their survival.
In continued dollarisation to harness the much-needed forex, Murerwa proposed that PAYE be payable in the currency in which employees receive remuneration.
In a bid to appease employees, the minister proposed a $500 000 “windfall” by broadening the tax-free threshold from $1 million to $1,5 million per month though calls were for $2,5 million.
Further review of tax brackets has been deferred to the 2006 budget.
The overburdened taxpayer has however been guaranteed continual payment of withholding tax on any investments made in marketable securities.
For the local bourse, that’s a slap in the face to the investors, since they will now be levied a 10% capital gains tax on any sale.
Zimbabwe National Chamber of Commerce president, Luxon Zembe, indicated that he was relieved that government had recognised that the country is in an economic crisis requiring implementation of tough measures.
“Some positive things did come out of the budget. There was general compliance with the monetary policy, particularly calls for a conducive investment climate, showing convergence of thinking by both the monetary and fiscal authorities,” Zembe said.
Zembe added that calls for order on the farms were very important and that what was now needed was practical implementation with the help of law enforcement agents.
He said calls for parastatals to charge economic prices where possible were welcome, adding that strategies should focus on restructuring as the problems the country is facing are structural.
Another analyst said increasing tax the burdens had serious implications for the business community with respect to both equity and efficiency of the regimes.