Paidamoyo Chipunza Senior Reporter
The Parliamentary Portfolio Committee for budget, finance and economic development has been gathering views and data on the 2020 national budget presented last week so that legislators can debate the issues raised.
At a post-budget workshop yesterday, the Zimbabwe Coalition on Debt and Development (ZIMCODD) was critical of the budget for allegedly doing too little to cushion the poor and vulnerable because it concentrated on addressing production deficits and employment creation.
The Zimbabwe Council of Churches (ZCC) said its own research suggested that investors placed significantly more importance on the operating environment than on tax concessions, and recommended that less emphasis should be placed on concessions and more on making it easier to operate a business.
ZIMCODD campaigns and advocacy officer Ms Tendai Bobo said although the value added tax (VAT) was reduced from 15 percent to 14,5 percent, the net effect of the tax reduction was less than the 2 percent tax on electronic cash transfers even with the threshold for that tax raised from $20 transaction to $100 transactions.
She said a family of five could not even buy basics below $100 considering that a bag of mealie meal cost about $70.
Ms Bobo said while increasing the tax free threshold from $700 to $2 000 and for the annual bonus from $1 000 to $5 000 was a commendable development, the impact was insignificant considering that a majority of people were now living below the poverty datum line.
In contrast, Ms Bobo said the budget had more incentives for cooperates, citing an example of reducing royalties on diamonds from 15 percent to 10 percent and the youth employment tax initiative (YETI).
“As the country moves towards becoming an upper middle income economy, we also need to make sure that the poor do not pay more than the rich, otherwise we will end up with a situation like that of South Africa where there is a huge gap between the poor and the rich.
“We are saying our policies must be consistent with the Sustainable Development Goals,” said Ms Bobo.
Speaking at the same occasion, programme officer with ZCC Mr Admire Mutizwa said the country should not concentrate on incentivising corporates through the tax system and instead more focus should be on the general operating environment.
“We did a study in 2015 on the impact of tax incentives on investment in the country and the conclusion of that study was that investors were not interested in tax incentives, but the general operating environment,” he said.
Chairperson of the Portfolio committee Cde Felix Mhona said some of the gaps noted by the stakeholders in the budget resonated with the committee’s findings to the same.
He said the committee will incorporate contributions into their final report, which they will present in Parliament next week for debate.