Chinamasa presents flat budget

FINANCE minister Patrick Chinamasa yesterday presented a flat 2015 national budget where he increased the tax-free threshold and reduced taxes on clear beers.

STAFF REPORTER

In his presentation of the $4,1 billion budget, which he described as static, Chinamasa tried to perform a delicate balancing act, describing it as developmental and inclusive.

The government expects to collect $4,1 billion in revenue against expenditure of $ 4,115 billion, with Chinamasa saying he expected $394 million in development assistance and $552 million in loans.

Finance and Economic Development minister Patrick Chinamasa

Finance and Economic Development minister Patrick Chinamasa

The tax-free threshold has been increased from $250 to $300, while taxes on clear beer have been reduced from 45% to 40%.

The reduction in clear beer taxes comes at a time when beer maker Delta Beverages has been experiencing a slump in sales and this move could spur sales.

Chinamasa expressed disdain at what he described as unnecessary imports, saying they had contributed to an unsustainable import bill of $5,3 billion.

“A significant volume of the imported products are non-essential, cheap and sub-standard,” he said.

“These include semi-processed products such as dough, rolls, buns, plain bread and cakes, among others.

“Continued importation of these products reduces the competitiveness of locally manufactured products, thereby exacerbating the trade balance.”

To protect the local industry, the minister proposed higher taxes on wheat flour products, sweets and chewing gum, among other goods.

While Chinamasa sought to present an “inclusive budget”, the high government wage bill continues to haunt Treasury, with almost 82% of government revenue going to pay civil servants’ salaries.

“From the outset of adoption of multi-currency pricing, domestic wages and prices were generally set with a mindset of the hyperinflationary environment,” he said.

“Hence, cost management remains a strategic imperative across the economy, including in the private sector.

“Managing the wage bill was identified as a key priority in reversing the skewedness of our budget from being consumptive to developmental.”

From the budgeted $4,1 billion a total of $3,2 billion dollars has been budgeted for civil servants’ salaries, which the International Monetary Fund has described as unsustainable.

Chinamasa reintroduced the Constituency Development Fund (CDF), a highly unpopular fund that was scrapped due to chronic abuse by legislators.

CDF was first introduced by the coalition government’s Finance minister Tendai Biti in the 2010 budget statement in which he allocated each constituency $50 000.

Finance minister Tendai Biti

Finance minister Tendai Biti

Several legislators were arraigned before the courts for looting the funds, but they could not be convicted because of lack of a law governing the fund.

Worryingly though, Chinamasa projected an economic growth rate of 3,2%, which is below the Sadc or African average, heralding another tough year for the country.

Mining, long thought to be the springboard of economic growth, will remain depressed next year, with Chinamasa projecting a 2% decline in mining revenue due to low commodity prices on the international market.

Despite putting on a brave face, the minister indicated that all was not well in the economy, with the country’s debt currently pegged at $8,387 billion.

He said 55 443 jobs had been lost since 2011, while 4 610 companies had shut down.

Our Partners:   NewsDay   The Independent   TheStandard  MyClassifieds