Zimbabwe gives low paid workers tax break

Zimbabwe gives low paid workers tax break

MURERWA

• Runaway prices hit Zimbabweans hard

• Stanbic predicts economic recovery

• Standard Bank: 'Gono targets achievable'

• Zim inflation deeps below 450pc

• Zim reports 78pc drop in inflation

• IMF team on surveillance mission in Zim

• Makamba nabbed in corruption blitz

• Chiyangwa arrested

By Agencies

ACTING Finance Minister Herbert Murerwa on Monday gave low-income Zimbabweans struggling with skyrocketing inflation a tax break, saying it would help the economy.

"With regards to tax on individual's income, high rates of inflation have not only eroded the real value of incomes but have pushed up most employees into high tax brackets," Murerwa said after a mid-term review of the government's financial policies.

"This undermines disposable incomes, critical for stimulating aggregate demand in the economy."

Murerwa announced that from September 1, the individual tax-free threshold would be raised from Z$200 000 to Z$750 000 per month.

"This policy measure will release about Z$750bn into the hands of taxpayers, including pensioners and thereby stimulate economic activity," he said.

Zimbabwe's annual inflation rate is among the highest in the world. It peaked at more than 600% at the end of 2003, but has since declined to around 395% in June this year.

The central bank has set an inflation target of less than 200% for the end of the year.

The southern African country has been in the throes of a social, political and economic crisis the past five years.

Murerwa said although personal income tax remained the major contributor to government coffers, he believed the tax relief would ultimately create more revenues for the state.

"As we improve disposable incomes on tax payers, they buy more goods and services and pay toward the VAT (Value Added Tax) process. So we hope the additional revenues will come through VAT," Murerwa said.

His mid-term review of the fiscal policy came ahead of a monetary policy announcement scheduled for Tuesday by the central bank which had recently announced steps to control burgeoning inflation.
JOIN THE DEBATE ON THIS ARTICLE ON THE NEWZIMBABWE.COM FORUMS
newsdesk@newzimbabwe.com