HomeCommentErich Bloch; New tax bands: Symptom of an insane govt

Erich Bloch; New tax bands: Symptom of an insane govt

ALMOST everyone, other than government itself, has long known that government is insane, but clearly that insanity has intensified exponentially, and by now government is mad in the extreme.

It is either that, or it is that government is resolutely determined to achieve that final and absolute destruction of the economy, concurrently with ensuring the final annihilation of the Zimbabwean populace.
This was irrefutably evidenced by last week’s issue of a government extraordinary gazette, modifying the income tax threshold, bands and rates, with effect from April 1. The first of the changes, raucously applauded by the state-controlled media, was to increase the individual’s tax-free threshold from $30 million to $300 million per month. It cannot be denied that the threshold of $30 million was ludicrously low representing the equivalent of only three loaves of bread, and that it had to be revised upwards as a matter of extreme urgency.
 However, with the Poverty Datum Line (PDL) for a family of six now being in excess of $1,5 billion, being the minimum income necessary to sustain a family without endangering health, a threshold of $300 million is contemptuously low. Even assuming that the family has two income earners and also assuming the highly improbable that both those income earners are earning in amounts, the lowest conceivably acceptable threshold would be $750 million per month. In practice, with over 80% of the employable population not having formal sector employment, the reality is that it is unlikely, in the extreme that they are earning equal amounts, and hence the threshold should, at the least, have been set at $1 billion. Moreover, with monthly inflation being considerably in excess of 100%, by the end of April, the PDL will have risen to almost $3 billion, or ten times the allegedly generous threshold now set by government. It is therefore abundantly evident that government has no qualms about rendering the poverty-stricken populace even more destitute than heretofore.
Effectively, a taxpayer earning an amount equal to the current PDL will be subject to $360 million income tax per month, leaving him with a net after-tax income of at best, 76% of PDL, meaning that he and his family will suffer considerable malnutrition, or be unable to afford adequate health care or education for the children, or a combination thereof. The magnitude of deprivation and hardship will be horrendous, but apparently this is of no concern for government.
As if this was not a sufficiency of cataclysmic taxation policy, government has also seen fit to raise the already grossly excessive maximum rate of taxation from 47,5% to a high as high as a reprehensible 60%. Any individual earning from $5 billion to $10 billion per month is now subject to tax at 50% on income over $5 billion, those earning from $10 billion to $15 billion will pay 52,5% on income over $10 billion, income in excess of $15 billion will attract tax at 55%, and income over $20 billion will be subject to tax at 60%.
Zimbabwe is now applying the highest rates of tax in the region, and compounds its rapacious expropriation of the incomes of the population by a wide variety of indirect taxes, including Value Added Tax (VAT), Customs Duty and Excise, petrol levies, ATM and cheque tax, and much, much more. The bottom line is that Zimbabweans are no longer working to generate incomes to care for their families and themselves, but to fund a profligate, spendthrift government.
The inevitable  consequence is that the already very greatly depleted resource of skills  necessary for the continuance of the  economy will now  become an accelerated “brain drain”. Almost  all of the few remaining  skilled in Zimbabwe  will undoubtedly look to departing for greener pastures  where, away from endless scarcities, soaring  inflation, collapsing  infrastructure, political oppression, and legalised theft  by the state of almost all their income,  they will enjoy a markedly better life. As a result, what little is left of the economy will be decimated into almost total non-existence, and the already greatly disabled infrastructure will go into total collapse.
Government will dispute this, claiming it to be extreme over-reaction and that in any event it needs to have the taxes in order to run Zimbabwe effectively. The fact that if all upper-income earners join the brain drain there won’t be any taxes to collect from them is obviously totally disregarded by government, or considered to be irrelevant. It is long overdue for government to pursue policies, fiscal and otherwise, which would bring about real economic recovery, restoring to Zimbabwe that which government has steadfastly destroyed since 1997.
 Zimbabwe  could have the second strongest  economy in the whole of Southern Africa, if not in all  of sub-equatorial Africa, for it has a vast  resource  of potential wealth in agriculture, mining, manufacturing, tourism and much  else, but it needs a government that is prepared  to do that which is necessary to beneficiate  economic development, instead of pursuit of provenly  catastrophic  policies, and self-aggrandisement.
If it did so, and hence brought about the readily attainable economic growth, then that growth would generate all fiscal flows necessary to fund the operations of government and service the needs of the country, instead of trying to extract those taxes from the majority of the population that is desperately struggling to survive, and from those whom government seeks to impoverish through excessive taxation, thereby driving them out of the country.
And, pending that economic recovery and resultant increased revenue flows into governmental coffers, government could cope with the lesser tax income that there would be if the threshold and the tax rates were well-founded, by constraining expenditures to the necessary. There are innumerable opportunities of containing government’s spending, without prejudice to the operations of government, or to Zimbabwe. These include, amongst many others:
lReducing the gargantuan size of government. It is incomprehensible that a country with a population smaller than that of New York should have more than twice the number of ministers as the US. Each of Zimbabwe’s 63 ministers and deputy ministers has a considerable infrastructure of offices, staff, vehicles, housing, and much more. A significant reduction in the number of presidential sycophants would substantially reduce expenditure.
lSimilarly, Zimbabwe has no need for as massive a public service as presently exists. Civil servants should not, as they presently are, be underpaid, but as against being recipients of market-related remuneration, which they should be accorded, they should provide market-related levels of service. The public service needs to be streamlined, applying natural attrition, and elimination of the incompetent, the inept, the lazy, and the corrupt. Cost

Recent Posts

Stories you will enjoy

Recommended reading

You have successfully subscribed to the newsletter

There was an error while trying to send your request. Please try again.

NewsDay Zimbabwe will use the information you provide on this form to be in touch with you and to provide updates and marketing.