‘Tax-free threshold, corporate tax reductions welcome move’

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BULAWAYO-BASED policy and economic analyst, Butler Tambo, has welcomed the tax-free threshold of $300, up from $250, saying it would increase disposable income of hard-hit workers and consumers.

BULAWAYO-BASED policy and economic analyst, Butler Tambo, has welcomed the tax-free threshold of $300, up from $250, saying it would increase disposable income of hard-hit workers and consumers.

SILAS NKALA STAFF REPORTER

Finance minister Patrick Chinamasa announced the increase in the $4,118 billion 2015 national budget last month.

Finance minister Patrick Chinamasa
Finance minister Patrick Chinamasa

Tambo said the increase in the tax-free threshold to $300 would bring a bit of relief to poorly paid workers although most were continuously burdened by the responsibility of taking care of large numbers of the extended family that are unemployed.

“This move might not really be felt in as far as stimulating local spending since unemployment is at more than 80% and the few formally employed people have to now look after a large group of people in the form of immediate and extended family members,” Tambo said.

He said the lowering of corporate tax on exporting companies was a welcome move as it would encourage companies to export more.

Companies exporting more than 51% will be charged 15%. The government expects a 5% increase in exports to $3,83 billion while imports are expected to drop to $6,15 billion from an estimated $8 billion this year.

Chinamasa announced a raft of duty-free concessions, including rebates on raw materials and imports for the manufacturing sector which were extended to try to improve capacity utilisation.

“However, exporting might not be very easy for Zimbabwean companies due to many reasons which include antiquated machinery, liquidity crunch, power outages, lack of credit lines and loss of investor confidence as a result of indigenisation and policy inconsistencies in the government, which discourage foreign direct investment to flow into the economy,” Tambo added.