HARARE – Finance minister Mthuli Ncube needs to reconsider his decision to totally throw out of the window suggestions by Members of Parliament for the non-taxable income threshold to be raised to $400.
In his 2019 national budget, Ncube raised the non-taxable income threshold to $350 from $300 but parliamentarians and many Zimbabweans still believe this is not enough given the soaring cost of living that is particularly hitting the poor very hard.
While the Finance minister should be applauded for raising non-taxable income threshold to $350, this does not in any way make his budget pro-poor as he would like to claim.
If anything, Ncube’s budget largely has nothing for the ordinary people.
Additionally, the $350 non-taxable income threshold is not very significant in the current context in which many workers have not enjoyed a pay rise for several years due to the prevailing severe economic challenges that have severely weakened companies.
But just like former Finance Biti said merely “tampering with tax brackets is tagging, moving the furniture on the deck while the titanic is sinking”.
The elephant in the room is certainly the thorny issue of currency reform.
The Confederation of Zimbabwe Industries (CZI) — the voice of industry in the country — agrees with Biti that there is an urgent need for currency reforms.
Unlike Biti, CZI believes the South African rand is the most practical option available to the country because the bulk of Zimbabwe’s trade is in rand.
At its congress last year, Zimbabwe’s biggest industrial body said the United States dollar should not be used as Zimbabwe’s anchor currency because it is too strong and will make the Zimbabwean economy continue to be uncompetitive.
Last year, Reserve Bank of Zimbabwe deputy governor Kupukile Mlambo made a similar call.
He said the central bank prefers a situation where Zimbabweans use the rand more than they use the other currencies (because) “we can benchmark pricing with the rand, which we can’t do with the (US) dollar because we trade almost nothing with the US”.
Respected economist Ashok Chakravarti has also repeatedly said that dollarisation is not a viable long-term solution to the issue of currency because Zimbabwe does not have “a good source of US dollars”.
Given the foregoing, it is clear that the country must address the issue of currency reform because without resolving this issue, no efforts to achieve competitiveness or industrialisation can succeed.