MOVEMENT for Democratic Change (MDC) member of parliament for Harare South, Gabriel Chaibva, has accused Reserve Bank governor Gideon Gono of furthering government’s policy of self-enrichment.
In an interview, Chaibva said the MDC was against the latest taxation levels as announced by acting Finance minister Herbert Murerwa on Monday.
Murerwa said he had “improved” the non-taxable income from $200 000 to $700 000, a figure described as “peanuts” by Chaibva.
“The issue is not about tax bands,” Chaibva said. “Tax should have been 30% at the highest level. However, government will continue to milk the fiscus as they have always done because there is rampant self-enrichment taking place in the corridors of power.”
The RBZ falls under the Ministry of Finance.
Economist John Robertson said the money proposed for workers by Murerwa was “meaningless” because by the time they received it inflation would have caught up with them.
He said while the amount would go a long way to try and please the electorate, it would not solve their problems.
The Zimbabwe Congress of Trade Unions (ZCTU) is calling for a minimum wage of $889 000.
Transport, electricity, rates, fuel and consumer items were recently increased and workers are demanding wages hikes.
The ZCTU has meanwhile described government’s policy of taxing companies at 30% while workers are taxed at 45% as a capitalist tendency.
ZCTU secretary-general, Wellington Chibebe, said the policy was contrary to government’s socialist ideology.
“The policy of government smacks of capitalist tendencies as evidenced by the low company tax (30%) while workers are taxed to death (45%) when the government purports to support socialist ideologies,” Chibebe said.
He said it was regrettable that government perpetuated workers’ poverty by continuously taxing them heavily.
“It is regrettable that government inherited and perfected the Rhodesian tax regime which perpetuated workers’ poverty with its retrogressive tax structure,” said Chibebe.
He said the tax rate for workers should be lower or at least match that for companies at 30%.
He said for the first time government had acknowledged the need to improve the status of workers, but that the effort by Murerwa fell far short of their expectations.
“For the first time the government has acknowledged the existence of labour and that workers should have disposable income, but this move is still far too short of the expectations of the workers in general and the ZCTU in particular,” Chibebe said.
He said the current tax bands were far too narrow because by the time of implementation, which has been set for September 1, most employees would be earning above $750 000, meaning they would be taxed at 45%.
“Effecting the changes from September 1 will render the increase of the threshold ineffective as by that time a lot of workers will be earning above the income tax threshold, meaning that they will now be in the 45% tax bracket,” said Chibebe.
He said current changes in the tax structure would be overtaken by events and eroded by hyperinflation.
Chibebe said the ZCTU maintained its position that workers earning below the poverty datum line, currently at $1 069 300, should not be taxed.
The government increased the tax-free income threshold from $200 000 to $750 000 with effect from the September 1.