Zimbabwe raises tax-free threshold to $1,5 million

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By Lebo Nkatazo

THE Zimbabwean government on Monday raised the tax-free threshold from $100 000 to $1,5 million, effective July 1 as record inflation takes its toll on people’s buying power.

The tax-free threshold had been pegged at $100 000 since January this year.

Finance Minister Samuel Mumbengegwi unveiled the tax relief measures.

He said: "In order to cushion taxpayers and in particular low income earners from incidences of higher tax rates, as well as enhance disposable incomes, thereby raising aggregate demand for goods and services, government is availing the following tax relief measures:

• raising the tax-free threshold from $100 000 to $1,5 million;

• widening the tax bands to end at $25 million from the current $5 million per month."

This week, state media reported that retailers had hiked prices by more than 300 percent after the Zimbabwe dollar plummeted 67% on the black market last week, forcing some retailers and fuel stations in the capital, Harare, to stop trading.

The currency, officially pegged at Z$250 to the US currency, sold for as much as Z$300000 a dollar on the streets, where most Zimbabweans exchange their foreign currency, money traders said.

It has depreciated from Z$100000 earlier last week and from Z$3000 to the greenback on January 20.

The recent hikes, say economists, show that the government’s much-touted signing of a social contract that it said would stabilise prices, has failed to work. The government accuses retailers of "profiteering".

State-controlled national television quoted officials from the government aligned Zimbabwe Federation of Trade Unions (ZFTU), headed by Joseph Chinotimba, as saying business was sabotaging the social contract by hiking prices.

Last week, outgoing US ambassador to Zimbabwe Christopher Dell said President Robert Mugabe's government was "committing regime change on itself” through its ruinous economic policies.

Dell said he expected the inflation in Zimbabwe, the world’s fastest-shrinking economy, to hit the 1.5 million mark by the end of the year from the May figure of 4530%.

The diplomat said Mugabe would be out of power by December, sparking a volley of criticism from the Zimbabwe government which slammed Dell's claims as "malicious propaganda".

Information Minister Sikhanyiso Ndlovu blamed Western economic measures against Zimbabwe for the nation's hardships, and insisted the government would "not be overthrown as it enjoyed the support of the people."

On Monday, the opposition MDC said government was digging its own grave.

“The people are clear that they hold the future of the country in their own hands. They are raring to teach tyranny a lesson…the visible signs of collapse around us are a clear message that Zanu PF is bound for the exit door,” said the party’s spokesperson Nelson Chamisa.

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