DURING the 2022 Pre-Budget Seminar in October, 2021, Finance and Economic Development minister Mthuli Ncube promised a “pro-poor” national budget, adding: “…most of our priority interventions will go towards addressing the needs of the poor, which resonates with the major thrust of National Development Strategy (NDS1) of Leaving no one and no place behind.”
However, the 2022 budget and all subsequent budgets have been anything but “pro-poor.” The minister rendered the 2022 national budget anti-poor when he announced that the “prices for government amenities, services and goods would increase in line with economic developments.”
In addition to the price increases, the minister introduced new taxes, such as the $50 on new cell phones and increased withholding tax from 10% to 30%, thereby increasing the burden on the poor and further eroding disposable incomes.
Since Ncube’s appointment in 2018, the finance ministry has introduced numerous individual taxes, which have further entrenched inequities in the economy.
The 2% fuel levy introduced in 2022 resulted in an increase in the cost of fuel and inevitably, an increase in public transport costs.
Although the government later introduced measures to reduce some transport-related costs, such as transit fuel duty, they did not result in a reduction of public transport costs.
Despite calls to abolish the 2% intermediated money transfer Tax (IMTT), it was retained in the 2022 national budget and remains to date. In the 2026 budget, the minister reduces the IMTT rate on local currency transactions while maintaining the 2% on foreign currency transactions.
The IMTT punishes citizens for transferring money across different platforms. This goes against the principles of financial inclusion.
While the government extended tax breaks and incentives to mining companies over the years, individuals have continuously been subjected to more taxes.
By government’s own admission, “mining companies do not require tax holidays as an incentive to invest.”
While it is commendable that government is in the process of discontinuing or modifying some mining tax breaks and incentives, treasury should also consider tax relief for individuals so that they can have more disposable income, which will give them an opportunity to participate meaningfully in the economy and contribute to its growth.
When citizens have more disposable income, they are more likely to spend it, thereby stimulating demand for goods and services, which in turn supports business expansion and job creation.
One of the major objectives in the NDS1, which runs from 2021 to 2025 is to Create more than 700 000 formal jobs and reducing extreme poverty.
One strategy for job creation is investment in infrastructure and support for small businesses. Job creation leads to increased consumer spending and investment.
However, in the case of Zimbabwe, the numerous taxes that are imposed are actually stifling the growth of small businesses.
The cost of formalisation is very high. If businesses increase prices of goods and services to keep up, they lose customers.
According to the 2024 National Competitiveness Commission Report, the country’s layered tax system is doing more harm than good, especially to manufacturers and small businesses.
The 2026 national budget continues to increase the tax burden on small businesses and consumers.
This is despite the government’s commitment to creating a Stable Macro-economic Environment and economic transformation sustained by high productivity levels.
Government also committed to addressing the needs of the poor, but it is not clear how and to what extent this is being done. What is clear is that Zimbabweans have to contend with more taxes.
The 2026 budget proposes increasing Value Added Tax (VAT) from 15% to 15,5%, introduces 15% withholding tax on offshore digital platforms, and a levy on United States Dollar cash withdrawals.
According to the minister, the cash withdrawal levy is to “discourage excessive cash withdrawals, enhance transparency, strengthen tax compliance and gradually shift economic activity towards formal and digital payment platforms.”
It is worth noting that the “excessive cash withdrawals” could be necessitated by urgent healthcare needs, where the service provider does not accept alternative methods of payment, or the digital payment platform is offline. Zimbabweans have been left stranded as they could not process online transactions due to power outages or technical challenges.
Analysts warn that the levy is likely to force some transactions underground, thus undermining the goal of formalisation.
The levy will disproportionately affect ordinary citizens while failing to address the broader economic challenges facing the country.
The levy is punitive for citizens who still have to pay bank charges.
More importantly, the levy is an example of the minister being tone deaf when it comes to citizens’ concerns. Zimbabweans have consistently raised concern over bank charges, and have asked for a review of the same.
It is therefore surprising that the minister chose to increase costs associated with banking.
One would have expected the minister to introduce measures to restore public confidence in the banking sector.
To its credit, the Reserve Bank of Zimbabwe (RBZ) took a step in the right direction in March this year with a directive that bank accounts with balances of less than $100 will no longer be subject to bank charges and transactions under US$5 will not incur any bank charges.
Minister Mthuli Ncube took a step in the wrong direction with the 2026 national budget. It is not “pro-poor.”
It does not address the needs of the poor and it definitely goes against the spirit of NDS1 of Leaving no one and no place behind.
*Buhlebenkosi Tshabangu-Moyo is a communications, gender and development consultant and women’s rights activist based in Harare*