The Sunday News
Rutendo Nyeve, Sunday News Reporter
THE government is set to review the salary tax bands in a bid to reverse the erosion of incomes and boost consumer purchasing power in the face of price escalation driven by speculative parallel market activity.
The intervention would bring huge relief to consumers at a time when businesses continue to increase prices of basic goods and services, which they index on the distorted parallel market exchange rates. Furthermore, the government will “imminently” effect a new remuneration package that will include an increment of the United States dollar component for public sector workers to cushion them from the rising cost of living.
Finance and Economic Development Minister Professor Mthuli Ncube told Sunday News in an exclusive interview that the government was working closely with the Central Bank to address various monetary issues.
He said the government was reviewing upwards the tax bands to restore consumer purchasing power.
“One of the issues that we need to do to support our citizens on is the tax that they are paying given the high levels of inflation. Inflation has gone up but the tax bands have not moved and it is an issue that we are looking into as government. I will be issuing an announcement soon to move the tax bands upwards so as to give relief to citizens or employees because of high inflation. We are on to it,” said Prof Ncube.
He said government intended to move the tax bands upwards annually to ensure the Zimbabwean dollar remains competitive on the market.
“This will go a long way in making sure the Zimbabwean dollar can buy more and ensure at least an individual has more money to spend in the shops. We intend to do this every year where we move the bands upwards. One of the things that we also did was to lower the Intermediated Money Transfer Tax (IMTT) for the USD transactions. So, all that will go a long way in giving citizens more money and transacting more cheaply. We are not trying to change the tax rate for each band but we are moving the minimum threshold upwards and that is all we are doing, but the tax rate stays the same for each band. So, this is really meant to give relief to those employees who are at the bottom end of the employment scale,” said Prof Ncube.
Mr Denford Mutashu
Confederation of Zimbabwe Retailers (CZR) president, Mr Denford Mutashu, hailed the move saying it was going to give people more disposable income.
“Moving the tax bands upwards will provide the necessary relief to the public as inflation bites, eroding purchasing power, especially in local currency. It will create demand but CZR urges Government to introduce all measures that contain money supply and speculation,” said Mr Mutashu
Zimbabwe Confederation of Public Sector Trade Unions (ZCPSTU) spokesperson Mr David Dzatsunga said the development should be accompanied by adjustments in salaries.
“The measure to review tax bands can only make a difference if accompanied by a substantial upwards adjustment of salaries that restores the value that was there and is being lost due to the exchange rate movement,” said Mr Dzatsunga.
Meanwhile, our Harare Bureau reports that the new pay offer to civil servants, which will also include a Zimbabwe dollar salary bump, could be tabled during this week’s National Joint Negotiating Council (NJNC) meeting that brings together Government and worker representatives.
Public Service, Labour and Social Welfare Minister Professor Paul Mavima told our Harare Bureau that the new salary package could be effected “within a day” once internal Government consultations have been concluded. Government, he said, was “looking at all possibilities” of cushioning public workers, as Treasury finalises the new package.
“As has always been the case with the Government, our workers are important to us. As we speak, Treasury is working on the issue. We are looking at all possibilities, including effecting an increase of the US dollar, as well as a pay increase in local currency. The consultations I am talking about do not take a long time. Once we have our numbers from Treasury, we will immediately submit them to the President for his consideration and adjustment before the National Joint Negotiation Council convenes for negotiations.”
This process, he said, can be completed within a day.
“A pay rise is imminent; public service workers need to be paid handsomely so that they do their job well. We, as Government, have an obligation to meet the needs of our workers so that they will not engage in corruption and ‘kungwavha-ngwavha’ (hustling). We expect workers to discharge their duties diligently.”
Zimbabwe Confederation of Public Sector Trade Unions president Mrs Cecilia Alexander said negotiations with Government will resume shortly.
“As you may be aware, our salaries, especially the local currency component, have been wiped away by inflation, and that alone calls for a salary increase. However, what is on the ground is that both the US dollar component and the local component need adjustment. The Government seems to be promising a good package that will be enough to cater for workers’ needs and they are also saying there is room for backdating the salaries.”
In March, Government awarded its workers a 100 percent salary increment, and reviewed their Covid-19 allowance from US$200 to US$250, except for health sector workers. Teachers were also awarded an additional US$80 monthly teaching allowance, while Government pensioners’ cushioning and Covid-19 allowances were reviewed from US$90 to US$100.
