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Untaxed allowances must be cut or done away with

Opinion & Analysis
THE government has been obstinately refusing to reduce the allowances of senior bureaucrats, but it is time that the authorities realised this is inevitable and the sooner they do it the better.

THE government has been obstinately refusing to reduce the allowances of senior bureaucrats, but it is time that the authorities realised this is inevitable and the sooner they do it the better.

Editorial Comment

Finance minister Patrick Chinamasa
Finance minister Patrick Chinamasa

Last year, Finance minister Patrick Chinamasa proposed a reduction in allowances, but this was shot down by President Robert Mugabe, probably for populist purposes rather than for pragmatic economic reasons.

With the economy on its knees, there should be an acceptance from the government that they cannot have a business-as-usual approach, but adjust to the new normal and do this by cutting their allowances.

To add insult to injury, the allowances are not taxed, meaning senior government officials are making a killing in untaxed revenue, a luxury that is not extended to the generality of the populace.

A proposal to have those allowances taxed is also being rejected by government officials, who are hellbent on keeping their luxury perks at whatever the cost.

But the reality is that the government officials cannot have their cake and eat it too.

The tax base has shrunk rapidly in the past four years, with the economy being characterised by unemployment and underemployment.

In a nutshell, what this means is what the government could afford to pay to its employees four years ago, it cannot do that today.

The government then ought to respond to the new reality by either cutting the staff numbers to reduce employment costs or getting rid of the allowances that they receive.

This is a painful thing to do, but it is inevitable because of the very government’s disastrous economic and political policies that are detrimental to the growth of the economy.

But it is quite clear that the government is loath to retrenching people and to add onto that Mugabe on Saturday ordered the re-employment of 2 000 youth officers, which will hit Treasury hard.

Thus, if the government insists on its bloated workforce, then the logical thing is to allow for cuts and taxation of allowances of top officials, so as to meet the new wage demands.

The government cannot have it both ways; it cannot be stubborn about retrenchments yet insisting top officials receive hefty perks in an environment where almost everyone has been forced to cut costs and reduce employment figures.

A situation where staff costs take about 90% of revenue is unsustainable and will lead to inevitable collapse.

The government ought to cut its coat according to its cloth.