Friday, 14 June 2019

2% TAX TO FUND INFRASTRUCTURE


Government has earmarked the 2 percent intermediated money transfer tax (IMT), which has performed above target since introduction last year for infrastructure development among other key economic enablers. Further, the Government indicated that airtime levy, which has also performed well consistently and raked in $11,4 million in April, had been earmarked for medical equipment.

A report by the African Development Bank (AfDB) says that Zimbabwe needs US$26 billion to bridge its infrastructure gaps, which entails deficiencies in services associated with roads, water and sanitation, transport, electric power and ICTs.
And since its introduction last year, the transactions tax, which has raised more than half a billion dollars, has been used for other critical things that include education and safety nets.

The tax has helped Treasury address the perennial challenge of budget deficits and came in handy in providing relief funding when Zimbabwe fell victim to the devastating Cyclone Idai, which hit parts of Manicaland and Masvingo provinces.

On a monthly basis, the IMT has rolled in an average of $100 million and with the tax now earmarked to finance, predominantly, infrastructure the tax could alter the face of Zimbabwe’s public infrastructure landscape, particularly roads. 

In its consolidated revenue accounts for April, Government expressly stated that the IMT tax, though it has been used for other public programmes, had been earmarked for infrastructure.

Total capital expenditure in April therefore came in at $138 million against a national budget of $127 million resulting in a positive variance of $10,4 million.

“A total of $92,6 million was spent on capital transfers against a budget of $32,5 million, a variance of 60,1 million, a 185 percent variance. The major transfer was to Ministry of Agriculture of $74,3 million.”

This comes as Government, which now has its finances in health state following successive budget surpluses since November last year, at $822 million posted a positive variance of 12 percent.

Major contributors to Government revenues in April were tax on goods and services, which contributed $536,3 million against a budget of $434 million and non-tax revenue, which brought $11,7 million.

Recurrent expenditure in the period under review amounted to $556,9 million against a budget of $428 million, resulting in a positive variance of $128,2 million or 8 percent.

“Employment costs amounted to $320,6 million against a budget of $279 million, a 15 percent variance. Goods and services amounted to $118 million, against a budget of $58,2 million.” Herald

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