Finance and Economic Development Minister Mthuli Ncube said that the Government is set to review the salary tax bands to reverse the erosion of incomes and increase consumer purchasing power.
This comes amid reports that the Government will soon award civil servants a salary hike in Zimbabwe dollars.
Speaking in an exclusive interview with The Sunday News, Ncube said the Government will soon review upwards the tax bands to restore consumer purchasing power. He said:
One of the issues that we need to do to support our citizens is the tax that they are paying given the high levels of inflation.
Inflation has gone up but the tax bands have not moved and it is an issue that we are looking into as government.
I will be issuing an announcement soon to move the tax bands upwards so as to give relief to citizens or employees because of high inflation. We are on to it.
This will go a long way in making sure the Zimbabwean dollar can buy more and ensure at least an individual has more money to spend in the shops.
We intend to do this every year where we move the bands upwards.
One of the things that we also did was to lower the Intermediated Money Transfer Tax (IMTT) for USD transactions.
So, all that will go a long way in giving citizens more money and transacting more cheaply.
We are not trying to change the tax rate for each band but we are moving the minimum threshold upwards and that is all we are doing, but the tax rate stays the same for each band.
So, this is really meant to give relief to those employees who are at the bottom end of the employment scale.
Confederation of Zimbabwe Retailers (CZR) president, Denford Mutashu, said:
Moving the tax bands upwards will provide the necessary relief to the public as inflation bites, eroding purchasing power, especially in local currency.
It will create demand but CZR urges Government to introduce all measures that contain money supply and speculation.
Zimbabwe Confederation of Public Sector Trade Unions (ZCPSTU) spokesperson David Dzatsunga said:
The measure to review tax bands can only make a difference if accompanied by a substantial upwards adjustment of salaries that restores the value that was there and is being lost due to the exchange rate movement.
On Friday, Treasury announced that corporate tax payments will be made in the local currency as a measure to promote the use of the Zimbabwean dollar in the economy.
In a statement, Treasury said to further promote the use of the Zimbabwean dollar, for the June 2023 Quarterly Payment Date, taxpayers will be required to settle 50% of the foreign currency portion of their corporate tax obligations in local currency.
