Tawanda Musarurwa Senior Business Reporter
Government will soon announce an upward adjustment in the tax threshold for low-income earners in order to improve disposable incomes, Finance and Economic Development Minister Mthuli Ncube said yesterday.
The review will be announced in the interim budget expected in the next two weeks.
“What we will be doing is to review upwards the thresholds for those paying income tax and payee.
“We are going to raise that threshold in the next two weeks when I announce the interim budget to give relief to those earning below the poverty-datum line because of the increase in inflation. We want them to have more money to spend in their pockets,” said Minister Ncube in an interview.
This will be the second upward review of the tax-free threshold this year, after it was earlier adjusted from US$300 to US$350 (prior to the removal of the 1:1 exchange rate between the RTGS dollar and the United States dollar).
However, the gains have been fast eroded due to the inflationary pressures, which worsened following the removal of 1:1 peg.
Minister Mthuli, however, said he was not privy to disclose the exact numbers before the announcement of the interim budget.
The Zimbabwe Coalition on Debt and Development (Zimcodd) has since suggested that the initial RTGS tax-free threshold should be set by multiplying the United States dollar amount by the existing exchange rate.
The proposed review of the tax-free threshold will be welcomed by low-income earners as the country’s inflation rose to 175 percent for the month of June, raising concerns of value erosion.
According to the latest Zimbabwe National Statistical Agency (ZimStats) figures Zimbabwe’s annual inflation for June 2019 rose to 175,66 percent from 97,85 percent in May 2019.
“The year-on-year inflation rate (annual percentage change) for the month of June 2019 as measured by the all items Consumer Price Index (CPI) stood at 175,66 percent, while that of May 2019 rate was 97,85 percent,” said ZimStats.
“This means that prices as measured by the all items CPI increased by an average of 175,66 percent between June 2018 and June 2019.”
Observers say the latest significant in the year-on-year inflation rate was driven by prices hikes in the last month as businesses reacted to the latest currency reforms in which Zimbabwe’s fiscal and monetary authorities moved to end the multi-currency system.