By Darlington Gatsi
FINANCE Minister Mthuli Ncube has resisted pressure for an upward review of annual tax-free threshold to US$300 or local currency equivalent by the National Assembly Tuesday.
In June this year, Treasury hiked the tax free threshold to ZW$50,000 a month in a bid to increase disposable income for workers.
Ncube opined then that this would cushion citizens, and preserve their earnings amid soaring inflation.
Harare East legislator, Tendai Biti says people were already overtaxed and government should review upwards the threshold to US$300.
“I therefore propose that the minimum tax free threshold must be as close to the poverty datum line of US$300, which would take the tax free threshold to an income of at least Z$4 000 000 per year,” argued Biti.
“That would offer some cushion and relief to the taxpayer. In this inflationary environment, the tax free threshold of Z$50 000 per month does not help or cushion anyone.”
Ncube pushed back the former finance minister arguing the raise in tax bands may result in the economy losing revenue.
“We feel that this was adequately argued based on the facts that we came across as we did our research,” Ncube responded.
“While on that, there is also the argument that perhaps we should move the tax free threshold to ZWL3 million, that would be too high.
“We would lose revenue and may in fact fuel inflation, but the role of taxes some of the time is not just to raise revenue but also to control expenditure behaviour,” he said.