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Minister Chinamasa chides civil servants

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Government workers were paid to do nothing while a whopping 81% of budgetary expenditures went towards employment cost

Government workers were paid to do nothing while a whopping 81% of budgetary expenditures went towards employment costs, Finance and Economic Development minister Patrick Chinamasa said yesterday.

VENERANDA LANGA SENIOR PARLIAMENTARY REPORTER

Chinamasa also said the country expected dull economic growth next year, hit by a lack of foreign investment, low commodity prices, a liquidity crunch in the financial sector and weak domestic savings.

He made the pronouncements while presenting the $4,1 billion 2015 Budget statement in the National Assembly.

“As MPs will recall, this budget is around the same level as that for the previous fiscal year, reflecting continued constrained fiscal space in 2014, and of this budget $3,32 billion which represents 81% of total expenditures will be on account of employment costs, leaving a balance of $798 million for operations, debt service and capital development programmes,” Chinamasa said.

“What it means basically is that we are paying people to sit in their offices and not to undertake operations, and this is a major challenge that we have to address.”

He said the major challenge being faced by Zimbabwe was that the revenue base remained limited, hence the need to expand it.

Although no major changes were made as compared to last year’s Budget, Chinamasa announced tax relief measures that will see an upward review of the tax free threshold from $250 to $300 and a further widening of the tax band with effect from January 2015.

“This means employees earning $300 and below will not be charged Pay-As-You-Earn,” he said.

Another positive thing from the 2015 Budget was review of excise duty on clear beer from 45% to 40%, in a move, which he said, would stimulate growth in volumes of production of beer.

However, excise duty on cigarettes has been increased from $15 per 1 000 sticks to $20 per 1 000 sticks with effect from December 1 2014, the reason being that duty on cigarettes was last reviewed in 2012 and did not reflect the social cost associated with consumption of hazardous substances.

On money lost by people in insurance policies and pension benefits during conversion from the Zimbabwe dollar to US currency, Chinamasa said a Commission of Inquiry to be set up will bring closure to the matter, adding stakeholders will be consulted at all stages to gather input.

He said from January to October 2014 imports into Zimbabwe were valued at $5,3 billion and were mainly of non-essential product such as importation of dough, rolls, buns, plain bread and cakes, among others, thereby exacerbating the trade balance.

Some of the products affected by the introduction of customs duty on their importation include biscuits, sweets, chewing gum, crisp bread, ginger bread, waffles and wafers, rusks, toasted bread, stuffed pasta, and others whose proposed duty is now at 40% or one dollar per kilogramme, while the proposed duty for tilapia fish is at 40% or $1,50 per kilogramme.

To protect manufacturers of electrical overhead cables, Chinamasa increased customs duty on other cables that compete directly with copper or other products by 30%.

On meat products, he said, “in order to promote local processing of meat products, customs duty on mechanically deboned meat, which is a blend of muscle and other tissues mechanically extracted from chicken carcasses, and a key input in the production of meat products, was reduced from 40% to 10%.”

In order to reduce competition in the clothing industry and dairy industry, Chinamasa further suspended rebate of duty on raw materials by a further twelve months, while he removed royalties on rough diamonds sold to firms licensed to cut and polish diamonds in order to encourage beneficiation. He said dormant companies will be exempt from the requirements of submitting annual tax returns with effect from January 2015, but they will be required to make annual declarations notifying their status.

On airtime, he proposed special excise duty to be levied on sale of airtime and data by licensed operators with effect from October 1, 2014 to avoid double taxation. He said Zinara will now collect presumptive tax from operators of commuter omnibuses, taxicabs, haulage truck and driving schools with effect from January 1 2015.

Companies that fail to remit taxes and levies they deduct from people’s payslips face stiffer penalties for failing to remit the amounts they would have deducted from people. About $98,7 million from the 2015 Budget was allocated in support of projects in the social sector such as health education and housing development.