Mthuli ups tax-free threshold

01 Dec, 2023 - 00:12 0 Views
Mthuli ups tax-free threshold Minister Ncube

The ManicaPost

 

Cletus Mushanawani
News Editor

GOVERNMENT continues cushioning workers from the prevailing harsh economic environment by converting the civil servants US$300 Covid-19 and cushion allowances to be part of their pensionable emoluments across the board, while the tax free threshold was increased to ZWL750 000 per month effective January 2024.

Presenting his 2024 National Budget yesterday (Thursday), Finance, Economic Development and Investment Promotion Minister, Professor Mthuli Ncube said in line with the projected economic growth of 3.5 percent, total revenue collections in 2024 are estimated at ZWL53.9 trillion, (18.3 percent of Gross Domestic Product (GDP), broken down as ZWL51.2 trillion tax revenue and ZWL2.7 trillion non tax revenue.

“Guided by the expected revenue envelope and the desired fiscal path, expenditures in 2024 are projected at ZWL58.2 trillion. The proposed expenditures take into account the need to maintain the purchasing power of civil service salaries, ensuring provision of core social services that benefit the poor; sustaining maintenance and rehabilitation of Government infrastructure, prioritised support to on-going public infrastructure projects, non accumulation of arrears and increase funding of infrastructure projects through Public-Private Partnerships (PPPs),” said Minister Ncube.

He added: “As part of the remuneration review process for civil servants, Government will convert the current Covid-19 and cushioning allowances, aggregating to US$300, to be part of the pensionable emoluments across the board, effective January 2024.

“The measures that I am presenting seek to provide relief to taxpayers, enhance the capacity of Government to generate additional revenue, in particular, from micro and small enterprises and mining, as well as strengthen tax administration.

“For tax relief measures, personal income tax-free threshold, I propose to review the tax-free threshold to ZWL750 000 per month or ZWL9 000 000 per annum, and adjust the tax bands to end at ZWL270 million per annum, above which tax will be levied at a rate of 40 percent, with effect from January 1, 2024.

“For the bonus tax-free threshold, I propose to review the local currency tax-free bonus threshold from ZWL500 000 to ZWL7 500 000, with effect from November 1, 2023.”

In order to support small-holder and subsistent farmers in the delivery of grain to the Grain Marketing Board and other commercial buyers, Minister Ncube proposed to review the tax-exempt threshold on withholding tax on agricultural commodities that include soya beans, sunflower, groundnuts and cotton seed from US$1 000 per annum to US$5 000 or local currency equivalent.

To ensure that everyone contributes to the fiscus in line with their levels of income, Minister Ncube said Government will introduce a wealth tax levied at one percent of market values of residential properties, with a minimum value of US$100 000.

“The key fundamental of tax policy is to address the regressivity of tax that occurs when individuals in a low-income category pay a higher percentage of their 40 income as compared to individuals in higher income brackets.

“Consequently, the tax incidences fall disproportionately on the low-income groups, resulting in inequality. In order to ensure that every person contributes to the fiscus in line with their levels of income, I propose to introduce a wealth tax levied, at a rate of one percent of market values of residential properties with a minimum value of US$100 000.

“Resources derived from the levy will be ring-fenced towards urban infrastructure development, in particular roads, water, sewer and community health centres. Principal private residential properties owned by elderly persons above 70 years will, however, be exempt from the tax,” said Minister Ncube.

In order to raise resources to finance road infrastructure, Minister Ncube proposed to review upwards the strategic reserve levy by US$0.03 and US$0.05 per litre of diesel and petrol, respectively, with effect from January 1, 2024.

On new toll fees for the premium Mutare-Plumtree and Harare to Beitbridge roads, Minister Ncube said: “Toll fees are currently pegged between US$2 and US$10, depending on the type of vehicle. I, therefore, propose an upward review of toll fees on premium roads, that is, Harare-Beitbridge and Plumtree-Mutare and other roads, with effect from January 1, 2024. Revenue derived from the increased fees will be remitted to the Consolidated Revenue Fund.

“I, further, propose that passport and selected fees charged by the Central Vehicle Registry be increased, with effect from January 1, 2024. Additional revenue generated from the above measures will be ring-fenced towards road infrastructure development.”

In response to the growing concerns on the adverse effects of consumption of sugar, in particular, contained in beverages, Government proposed to introduce a levy of US$0.02 per gram of sugar contained in beverages.

“The consumption of high sugar content beverages is linked to increased risk of non-communicable diseases.

“It is, thus, necessary to discourage consumption of high sugar content beverages, hence, I propose to introduce a levy of US$0.02 per gram of sugar contained in beverages, excluding water, with effect from January 1, 2024. Funds derived from this levy will be ring-fenced for therapy and procurement of cancer equipment for diagnosis,” said Minister Ncube.

To curb the growth of illicit trade in cigarettes, Minister Ncube said: “The growth of illicit trade, in particular, cigarettes, has increased contraband cigarettes produced in legally registered factories under registered brands, thereby decelerating the growth of revenue to the fiscus.

“A digital platform that provides real time, traceable and authentic data on locally manufactured goods will be beneficial to the fiscus. Government, will, thus, explore implementation of a digital platform on locally produced goods, in particular, cigarettes.”

 

Budget highlights:

 

ZWL750 000 tax-free threshold per month

Tax-free bonus now ZWL7 500 000

1 percent wealth tax for residential properties

Strategic Reserve levy for fuel to go up

New toll fees for premium roads.

 

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