No wage increase for civil servants

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Finance minister Tendai Biti yesterday presented a review of the Budget, which left some smiling and others frowning.
Government ruled out any chance of a wage increment for civil servants, but ceded tax relief by marginally increasing disposable incomes for all working populations.
The tax-free threshold for individual income will be raised to $175 dollars from $160 in January with effect from this month. The rest of the tax brackets have been left untouched.
Although the tax relief appears negligible in nominal terms, it could reduce the Zimbabwe Revenue Authority (Zimra)’s monthly pay as you earn (Paye) receipts, currently the second largest tax head after value added tax.
Biti said civil servants’ salaries could not be adjusted upwards at this point given the unsustainable growth of the sector in both size and the value of wage bill, now a huge fiscal burden. The wage bill – estimated at $50,1 million per month – alreadyaccounts for 62% of recurrent expenditure.
The taxation changes affected the mining sector most.
Miners now face higher taxes in the second half of the year after government raised royalties on precious minerals.
Royalties on precious mineral will be adjusted upwards to 4% of the gross market value of the stones from 3,5%, with effect from October 1. It is the second review in just 12 months.
This disregarded the sector’s recommendations to have royalties and mining title fees reduced to create financial space for recapitalisation.
“Whereas the turnover of the mining sector was close to $1 billion in 2009, a paltry $44,8 million, which includes corporate tax, value added tax, Paye and royalties was contributed to the fiscus.”
Biti however deferred the planned scrapping of special initial allowances to next year. The measure seeks to curb tax deferrals currently reducing the mining sector’s contribution to the fiscus.
The review statement also effected the following changes:
• Duty on vehicle imports by tourism operators suspended effective September 1
• Vat payment dates moved to 10th of the following month
• Tax amnesty for defaulters
• 15% export tax on chrome
• 15% import duty on chrome refines
• 15% duty on competing products introduced
• Import duty on raw materials lifted on selected products
• Suspension of import duty on selected basic commodities (mostly food) lifted
• VAT electronic transfer system introduced 1 August
• Excise duty up on wines and spirits
• Public expenditure approval to be done in consultation with Finance minister instead of chief accounting officer
• Tax rebate on imports of fiscalised devises to be introduced
• Electronic cargo tracking system to be implemented 2011
• Electronic fiscalised recording of taxable transactions introduced October 1