Government has raised the tax-free threshold to $5 000 up
from $2 000 monthly while those earning above $100 000 will pay 40 percent tax
with effect from next month, Finance and Economic Development Minister
Professor Mthuli Ncube said yesterday.
Presenting the 2020 Mid-term fiscal policy statement in
Parliament, Prof Ncube said the tax-free threshold review was meant to cushion
employees from high inflation induced by wage and salary increases.
Recently, the Government reviewed upwards the salary of its
workforce from about $2 500 to $8 000 for the lowest paid employee. While all
sectors of the economy were affected by the Covid-19 pandemic, there is
variation in terms of severity, with sectors such as tourism, non-food
manufacturing, mining, financial services, transport and distribution and
education being adversely affected. On the other hand, health services, ICT,
manufacturing of food stuffs and electricity and water had gains.
Some of the positives that have been registered so far
include a budget surplus for the period January to June 2020 of about ZWL$800
million. Grain production increased by 24 percent from 852 000 tons to 1 060
000 tons in 2020, electricity generation during the first quarter of 2020
increased compared to the last quarter of 2019, with total electricity
generated amounting to 1 294 GW/h, up from 1 226 GW/h resulting in reduced load
shedding.
The Minister announced that workers were being cushioned
through increasing tax-free thresholds. “In an effort to cushion employees from
inflation induced by wage and salary adjustment, I propose to review the
tax-free threshold from ZWL$2000 to ZWL$5000 per month. I further propose the
tax band to begin at ZWL$50001 and end at ZWL$100 000 above 40 percent will
apply and this is with effect from 1 August 2020,” he said.
The Minister said Government remains committed to
implementing mitigatory measures to contain the impact of Covid-19 pandemic on
the economy and interventions to limit further damage would continue to be
reviewed.
Prof Ncube said Government came up with mitigatory
interventions covering both prevention and support to productive sectors in
order to save lives and livelihoods.
He said in order to save lives, Government has managed to
unfreeze 4 713 posts in the public sector with a view to scaling up the
response to the Covid-19 pandemic.
“Furthermore, resources were directed to alleviate the
plight of vulnerable groups in our society who were most exposed under this
Covid-19 crisis. Accordingly, resources to cushion one million vulnerable
individuals were put in place and payments continue through the Social Welfare
Department,” he said.
By end of June, Government had disbursed ZWL$1,8 billion
towards various ministries, agencies and departments to tackle the Covid-19
pandemic.
By that time, it had also disbursed ZWL$738,5 million to
the Ministry of Health and Child Care mainly to cover Covid-19 Risk allowances;
additional employment costs from recruitment of additional staff to fight
Covid-19, and capacity building of health staff training, among others.
Prof Ncube said the level of vulnerability during the
lockdown increased and to mitigate against the effects of the lockdown, ZWL$50
million has been availed so far to support poor households.
“Furthermore, lockdown conditions required that all the
homeless be placed in various shelters and ZWL$35,5 million was availed towards
that whilst quarantine centres received ZWL$50 million,” he added.
The Minister said the 2020 Second Round Crop and Livestock
Assessment Report indicates that grain production increased by 24 percent from
852 000 tons to 1 060 000 tons in 2020.
Traditional grains production for the 2019/2020 season is
estimated at 152 515 tons which is 103 percent more compared to 75 209 tons in
2018/2019.
The increase is attributed to increased support extended to
farmers under the Presidential Input Scheme, encouragement by the Government as
well as capacity building of farmers.
For purposes of enhancing food security, this year
Government seeks to expand the winter maize programme targeting to put 4000ha
in low-lying areas of Masvingo, Matabeleland North and Mashonaland West.
Prof Ncube said the 2020/21 Presidential Input Scheme is
targeting to support 1,8 million households to grow maize and traditional
grains. The programme will be funded through the budget for procurement of
inputs.
On the 2020/21 Summer Cropping Programme, Prof Ncube said
Government is continuing the guarantee arrangement with the financial sector.
The financial sector is expected to target highly productive farmers in
irrigated and highly productive areas.
Turning to mining, the Minister expects the industry to
perform well.
“Currently, mining sector contributes about eight percent
of total GDP and has set a target of generating US$12 billion revenues by 2023
from as little as US$2,7 billion in 2017. Priority policy areas to attain this
target and other Transitional Stabilisation Programme benchmarks include
reviewing and updating mining legislation, enhancing exploration and investment
in mining, modernisation and computerisation of the mining title administration
system (mining cadastre), improving transparency in the mining sector and
establishing a viable fiscal regime,” he said.
Prof Ncube said beneficiation and value addition of
minerals to create more jobs and earn more foreign currency are priorities for
the sector.
He said the manufacturing sector remains central for
industrialising the country and top on the agenda are policy reforms to improve
the investment environment.
“However, the sector continues to face investment deficit
and other challenges relating to electricity and foreign currency supply and
inflation. The Covid-19 pandemic also depressed the performance of the
manufacturing industry by restricting production, distribution and consumption
of goods and services, among other factors,” said Prof Ncube. Herald
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