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Govt Introduces Additional 2.5% Tax For Hard-Pressed Civil Servants

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By Leopold Munhende

THE government has introduced an additional 2.5% tax for agitated civil servants effective this March in what it calls a new loans-centred initiative that will benefit its struggling employees and protect them from loan sharks. 

The government said it had also injected $100 million for the proposed Civil Service Mutual Saving Fund loan facility. 

Presenting the loan facility at a press briefing in Harare Wednesday, Finance Minister Mthuli Ncube, said every government employees will, from next month, contribute 2.5% of their monthly salary before they start benefiting from the loan scheme. 

“Cabinet resolved that the government employs the Mutual Savings Fund and that it be established by March 2020, that government will immediately provide a lumpsum injection of $100 million from the budget to facilitate the expedited establishment of this fund,” Ncube said.

“A 2.5% of the total remuneration (will) be deducted from every government employee in consultation with the Public Service Commission (PSC),” Information Minister Monica Mutsvangwa added.

“A steering committee comprising the PSC, Ministry of Finance and Office of the President and Cabinet be established to decide on the implementation modalities of this fund.” 

Ncube said the government was protecting its 300 000 strong workforce from loan sharks.

“Civil servants tend to borrow out there. Some of them are actually in serious debt, with loan sharks charging very high interest rates. Our view is, let us protect civil servants with an alternative where they can borrow cheaply and support their day-to-day activities,” he said.

“What we had done so far, is we had solved the pension issue. When they retire, they have a pension so that is ok, but they have needs now and they are borrowing from loan sharks at a very high interest rate and we want to solve that problem.”

The 2.5% adds to the controversial 2% tax on all mobile money transactions introduced by Ncube as part of his unpopular austerity measures last year. 

Most civil servants are currently battling to make ends meet as their salaries have been devalued by the prevailing hyper inflationary environment. 

Government has also not responded to the demands by the public servants to receive better salaries pegged against the inter-bank rate.