Treasury widen tax-free threshold

by Rungano Dzikira

Finance and Economic Development Minister Professor Mthuli Ncube has reviewed upwards the tax-free threshold from ZWL$2 000 to $5 000, with effect from August 2020, in an effort to increase workers disposable incomes amid rising inflation.

Presenting the 2020 Mid-Term Fiscal Review Statement this Thursday, Minister Ncube said the decision was taken to cushion workers against ‘bracket creep’ and stimulate waning demand for goods and services.

Themed “Gearing for Higher Productivity, Growth and Job Creation”, Minister Ncube’s Mid-Term Fiscal Review Statement provided and account of progress towards sustainable macro-economic fundamentals and carried a number of measures to protect vulnerable groups, especially those affected by Covid-19 and drive productivity, adding that the thrust of the 2020 National Budget be maintained.

Though the statement comes against the backdrop of foreign currency shortages, high inflation, and low industrial production, the finance minister said that ministries had on average utilised 46% of their votes as at June, implying that 54% of the original 2020 Budget remained unutilised.

“This enables treasury to avoid tabling a supplementary budget, given our current levels of spending, NO SUPPLEMENTARY BUDGET!” he said.

The treasury chief lamented over the effects of Covid-19 which he said had put a strain on the economy and anticipated growth projections.

“The pandemic also caused input supply disruptions in source markets, hence the manufacturing sector is expected to contract by negative variance of -10.8% in 2020 against 1.9% as originally projected.”

A combination of Government intervention and external development support in mitigation of the Covid-19 pandemic is expected to alleviate deeper contraction of the economy to a projected negative variance of 4.5% in 2020, against the initial budget projection of 3% growth.

In line with the upcoming National Development Strategy framework economy is anticipated to recover GDP growth of about 7.4% in 2021 before moderating to around 5% thereafter.