By Staff Reporter
FINANCE Minister Professor Mthuli Ncube should, among other things, review tax-free thresholds for employees to cushion them against galloping inflation, a local economist has said.
Ncube will, this Thursday, present to Parliament his mid-term fiscal policy review which is expected to be accompanied by a supplementary budget.
The review comes at a time the minister’s 2022 national budget which was presented last year has effectively been shredded by adverse global economic headwinds blamed on the Russia-Ukraine war which started in Russia.
“The budget mid-term review is essential especially in this hyper inflationary environment,” Gweru-based economist Trust Chikohora told newzimbabwe.com.
“The budget that was proposed last year the allocations that were made beginning of the year of last year cannot work now for the ministries.
“Therefore, it is essential to come up with a supplementary budget which speaks to the realities of the day because of the effects of inflation, or loss in value of the Zimbabwean dollar.
“So, that is essential so that on the second half of the year government can work with realistic figures in terms of budget allocations.”
Most countries across the world are faced with inflationary pressures and cost of living crises.
Zimbabwe has not been spared either, with inflation officially now more than 200% while the local currency has also collapsed in value.
Chikohora said against this background, the treasury chief will need to review the tax-free threshold for employees.
“It is important to review aspects such as the tax free threshold, for employees because with the effects of inflation and loss in value of Zimbabwean dollar it means the tax free thresholds are no longer relevant,” he said.
“There is need to adjust them in line with the realities of the day so that employees can get higher disposable incomes; so, those adjustments are essential and we look forward to the Minister making necessary adjustments.”
Chikohora added; “There will also be need to look at what measures can be put in place to incentivise businesses in order to be able to achieve the objectives that the government may have, especially in terms of cushioning employees and those in the private sector.”
In addition, the minister will also need to come up with measures to stem the galloping inflation as well as stabilise the country’s currency.
“(We) also a need to look at how we can be able to finance economic growth without creating opportunities for arbitrage in terms of low affordable interest rates,” said Chikohora.
“There is a whole matrix that the minister needs to look at so that the economy can stabilise and economic growth can still be achieved in this environment.”
The treasury minister is expected to present his statement Thursday afternoon.