By Alois Vinga
THE Zimbabwe Congress of Trade Unions (ZCTU) says Finance Minister, Mthuli Ncube’s tax free thresholds in the 2023 National Budget are a blow for the workers who will continue to carry the yoke of over taxation.
Prior the announcement of the blueprint, labour had lobbied for the implementation of a tax free threshold which reflects economic fundamentals like inflation, Total Consumption Poverty Line (TCPL) for an average family of six and the national minimum wage among other demands.
However, Ncube reviewed the tax-free threshold on local currency from ZWL$600,000 per annum (or ZWL$50,000 per month) to ZWL$900,000 per annum (or ZWL$75,000 per month).
The tax bands will end at ZWL$12 million, above which tax will be levied at a rate of 40%.
But in the ZCTU 2023 National Budget Review Communique seen by NewZimbabwe.com, the workers group expressed dissatisfaction over the tax bands.
“The review of the tax-free threshold to ZW$75,000 per month represents a 50% increase. This increase is way below the October 2022 annual inflation rate of 268.8%, implying that in real terms there is actually a decrease.
“The revised tax-free threshold is also below the average minimum wage of about ZWL$98,000 as at November 2022.
“Importantly, the revised tax-free threshold is grossly inadequate given the fact that the October 2022 Food Poverty Line (FPL) for an average family of 5 is ZWL$107,273 while the Poverty Datum Line (PDL) for an average household of 5 is ZWL$140,720.35,” said the labour group.
The federation called for the urgent need to cushion workers through linking tax-free threshold to the Poverty Datum Line (PDL), saying notwithstanding the revenue measures and incentives, the tax regime remains highly onerous and regressive, resulting in an increase in cost of doing business as well as the erosion of real incomes.
The labour group said the restoration of the Value Added Tax (VAT) to its pre-COVID-19 pandemic level of 15 from 14.5% will result in an increase in the cost of some goods and services by about 3.4%.
ZCTU said the restoration of customs duty on basic commodities will result in an increase in the price of imported basic commodities.
“Given the complexity and sensitivity of the structural challenges the country is facing and the inherent policy conflicts involved, we urge the authorities to urgently negotiate a Social Contract with issue-specific protocols to deal with the challenges in a holistic and integrated way,” added ZCTU.