Zimbabwe Finance Minister Mthuli Ncube has trimmed his economic growth forecast for 2022 to 4.6% from his previous 5.5%, citing “the impact of the external global environment as well as our own unique circumstances”.
Ncube presented his Mid-Term Budget Review statement to Parliament yesterday.
He announced a raft of measures to increase revenues, and this includes new taxes on mines and tougher action against tax dodgers.
Here are some highlights:
Supplementary budget
Reflecting the impact of inflation on the budget, Ncube announced a supplementary budget, proposing additional spending of $929 billion. Of this extra money, 53% is going towards salaries, while 19% will go to capital projects.
In the first six months of the year, the government collected revenue of $506.6 billion and spent Z$534.5 billion. This left a budget deficit of $27.9 billion, against a target deficit of $45 billion.
Tax relief measures
People earning $600 000 per year, or $50 000 per month, will no longer pay tax. This is up from the previous $300 000 threshold. Tax bands now end at $12 million from $6 000 000 per annum. Above this, tax will be 40%. This is with effect from 1 August. The Zimdollar tax-free bonus threshold is up from $100 000 to $500 000 from November.
The 2% tax on electronic money transfers will now apply only to transactions above Z$2 500, up from the previous $1 000. For companies, the maximum tax payable per transaction is up from $1 320 000 to Z$3 300 000 on transactions above Z$165 million.
Raising revenue
Ncube wants more taxes from miners and tougher action on tax avoiders.
Mining royalties
Ncube says mines are contributing just 1.2% of GDP in direct taxes, which he says is lower than the regional average of 2%.
Platinum miners, for example, pay 2.5%, after a court case that cut the royalty from 10% in 2015. In comparison, gold miners pay royalties of up to 5%. Ncube is, therefore, increasing royalties for platinum miners to 5%. Lithium producers will also pay a 5% royalty, starting in January.
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