Patrick Chinamasa unveils ‘pro-production’ budget for 2017

Source: Patrick Chinamasa unveils ‘pro-production’ budget for 2017 | The Financial Gazette December 8, 2016

FINANCE Minister Patrick Chinamasa has unveiled a budget which seeks to push production frontiers across all sectors of the economy but still forecast a deficit and lower economic growth in 2017.
In his presentation at Parliament, Chinamasa announced a budget whose thrust is anchored on fiscal adjustment, structural reforms, stimulating productivity across sectors and poverty eradication. Total revenue is projected at US$3,7 million and expenditure of US$4,1 million.

Highlights
Growth is projected at 1.7%, from 0.6% estimated in 2016;
• Agriculture and mining to drive overall growth with sector growth of 12% and 0.9%
respectively in 2017;
• Inflation projected at 1.1%, from a negative 1.5% in 2016.
• Total revenues are projected at US$3.7 billion;
• Total expenditures are projected at US$4.1 billion;
• Financing gap of US$400 million.
• Government wage bill takes US$3.0 billion in 2017;
• Capital expenditure amounts US$520 million, which is 3.6% of GDP;
• Trade deficit of US$1.537 billion, compared to US$1.985 billion in 2016;
• Debt stock at US$11.2 billion as at 31 October 2016, which is 79% of GDP.

TAX PROPOSALS
Support to Industry
• Upward review of duty on textiles in order to level the playing field.
• Rebate of duty on selected raw materials in order to enhance the competitiveness of
domestic industry.
• Removal of luggage ware, wheat flour and school uniforms from the Open General
Import Licence.
Revenue Enhancing Measures
• Additional suppliers to be licenced to supply fiscalised devices;
• Tightening existing legislative loopholes relating to the taxation of intangibles, general
administration and management fees between associated companies, dividends
arising from disallowed interest expenses and a permanent establishment.
• Standard rating of meat products, rice, margarine and potatoes.
• Introduction of heath fund levy of 5 cents for every dollar of airtime & mobile data.
Tax Relief Measures
• Introduction of tax incentives for companies operating in Special Economic Zones.
• Support measures for SMEs through downward revision of presumptive taxes,
facilitation of tax registration, ring-fencing resources to capitalise the Small and
Medium Enterprises Development Corporation.
• VAT exemption for mobile banking services.
• Ring fence importation of 30 luxury buses per annum.
Efficiency in Tax Administration
• Measures to enhance tax administration targeting regulation of clearing agents and
tax consultants as well as publishing of the penalty loading model. FinX