Tax reviews urgent in face of inflation crisis


The huge jump in prices of goods and services due to the currency collapse has left the majority of Zimbabweans struggling for survival amid declining incomes. 

According to the Zimbabwe National Statistics Agency (Zimstat), inflation rose to 175.8% in June, up from 86.5% the previous month.

Monthly inflation went up by a significant 58.8 percentage points in June to 74.5% as it reflected the steep price increases that accelerated in May.

The Zimbabwe dollar lost value significantly between May and June as the government struggled to put brakes to the economic collapse.

The dollar has depreciated by a staggering 647% on the much used parallel market, according to economic commentators.

Most businesses are now selling goods and services using the more stable United States dollar, but only a few are able to pay their workers in foreign currency.

The government also pays its workers partly in foreign currency, but has not been able to review the salaries to match the rate of inflation.

Income tax brackets that were set in January have become meaningless with workers only exempted if they earn $91 666 or less.

The low tax brackets mean that workers are paying an arm and a leg to the government, but taking home virtually nothing.

Frequent salary reviews have meant that poor workers are put in tax brackets that are way above their tax grades.

Workers can no longer afford basics such as accommodation, medical care and food.

The government has not been responsive enough in the face of the crisis and this has left workers in a very unfortunate situation.

It is, therefore, imperative for the Ministry of Public Service, Labour and Social Welfare to cause the Tripatite Negotiating Forum to convene as a matter of urgency to review the erosion of incomes.

The government recently introduced measures to stop the further slide of the Zimbabwe dollar, which included tightening the liquidity situation, but it is clear that the policies do not have an impact on the pockets of workers.

Workers have been suffering from bouts of inflation since the re-introduction of the local currency in 2019 after a decade of dollarisation and it is high time that measures are put in place to cushion them.

Poor salaries, especially in the public sector, have resulted in a severe brain drain that has mostly affected the education and health sectors.

The government cannot afford to remain silent on the matter without risking social upheaval.

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