HomeNewsNo joy for Zimbabwe civil servants

No joy for Zimbabwe civil servants

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Zimbabwe’s Finance and Economic Development minister Patrick Chinamasa on Thursday presented a $4,1 billion 2014 National Budget where he proposed to stagger civil servants salary adjustments as Treasury introduced new taxes and levies to widen revenue base.

REPORT BY BERNARD MPOFU
ACTING BUSINESS EDITOR

Chinamasa projected that the economy would grow by 6,1% next year driven by recovery in agriculture, mining and construction sectors.

The minister also announced new measures to cushion jobless workers from the harsh economic environment at a time most companies are closing shop due to capital constraints besetting the economy.

Presenting a Budget statement in Parliament anchored on the Zanu PF economic blueprint — Zimbabwe Agenda for Sustainable Socio-Economic Transformation (Zim Asset), Chinamasa proposed a raft of measures to introduce a levy on unprocessed platinum to push miners to set a refinery for the white metal amid concerns government could be losing millions through exports.

He said government would in the coming year increase its surveillance on diamond mining firms to plug revenue leaks. He also proposed a ban on all gold exports saying the bullion should be sold through Fidelity Printers and Refiners which resumed operations on Tuesday this week. Mining has since overtaken agriculture as the mainstay of the economy.

Treasury undertook to unlock funding for agriculture which has over the past years been on a downward spiral.

Official figures show that total revenue collections during the year 2013, up to November amounted to $3,360 billion, against a target of $3,395 billion, resulting in a negative variance of $35 million.

Cumulative expenditure on the other hand had a $130 million overrun during the period under review.

Government expects to collect $4,4 billion in revenue in 2014 up from $3,8 billion this year.

Chinamasa recommended a new levy on mobile money transfer services which have in recent months driven the country’s financial inclusion at a time confidence in the formal banking system had declined due to high bank charges.

A new road levy on motorists was also introduced in a bid to boost funding to rehabilitate the country’s road network. He also proposed plans to stabilise the banking sector in a bid to restore confidence on the back of an underperforming economy.

Turning to the public sector wage bill, Chinamasa said Treasury was currently operating on tight fiscal space, with the civil service wage bill accounting for 70% of total revenue.

He said any increase on the wage bill not anchored on growth in revenue would have a crowding out effect, starving capital projects as well as key social service of funding.

Despite announcing a delay in new salaries for the civil service, Chinamasa, however, proposed to introduce non-monetary incentives such as residential stands and mortgages for government workers.

This development could be a huge climb-down by Zanu PF, which at the weekend assured the civil service — during its annual conference — that the minimum salary for government workers would be pegged against the poverty datum line which is currently hovering around $540.

He said salary adjustments will be inflation-related. Inflation is expected to close the year at 1,5% “Government acknowledges that retrenchment packages provide a valuable source of income to retrenchees whose chances to be gainfully employed are minimal, once they are laid off. In order to assist retrenchees invest in income generating projects, the tax-free threshold of $5 000 or one third of the retrenchment package up to $15 000, was introduced in January 2010.

“In view of the current market developments whereby higher retrenchment packages are paid, I propose to review the non-taxable portion of the retrenchment package to $10 000 or one-third of the retrenchment package up to a maximum of $60 000. This measure takes effect from 1 January 2013,” Chinamasa said.

Treasury also proposed to increase the income tax threshold of high net worth individuals earning a minimum monthly salary of $20 000 to 50% from the current 45% levied on income workers earning over $10 000.

This, he said, was expected to address the growing income disparity between low and high income earners.

“In order to address the housing backlog, government has established an Insurance and Pension Sector Housing Fund (IPHF). The Fund is expected to be funded from proceeds of housing bonds to be issued to companies in the pension and insurance industry. . . In order to facilitate uptake of the bonds, I propose to exempt from income tax, receipts and accruals of the Fund and interest earned on the bond, with effect from 1 January 2014,” Chinamasa said.

In a bid to reduce the country’s perennial power deficit, the Finance minister proposed to exempt electricity imports from Value Added Tax. Other measures to protect sectors such as dairy that are facing stiff competition from imports were introduced.

Chinamasa also extended operating hours at Chirundu and Victoria Falls border posts.

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