By Promise Dube
The Treasury has raised the tax-free threshold from ZWL$91 666 to ZWL$550 000 with effect from August 1, 2023, to provide relief to taxpayers while the highest tax rate of 40 percent will apply to those earning ZWL$15 million upwards.
Some have praised the move saying it is welcomed because it leaves consumers within the affected tax bracket with more disposable income while others have described this as another election gimmick because it could have been done earlier in the year if the government was sincere about providing relief.
The announcement was made by George Guvamatanga, Permanent Secretary in the Ministry of Finance and Development, in a letter to Zimbabwe Revenue Authority (ZIMRA) Commissioner General, Ruth Chinamasa, who stated that due to macroeconomic changes, employees needed compensation reviews because some incomes and earnings were subject to higher tax rates.
“As you are aware, the local currency Pay as you earn (PAYE) tax table which comprises a tax-free threshold of ZWL$91 666 per month with the highest marginal tax rate of 40 percent on incomes. above ZWL$1 000 000 per month was last reviewed with effect from 1 January 2023,” said Guvamatanga.
Guvamatanga stated that this is as a result of changes that took place and saw the need to review salaries and some of them are subject to high rates.
“Due to recent macroeconomic changes that necessitated salary reviews ,a significant number of employees are caught up in bracket creep,consequently some salaries and wages are subject to higher rates of tax,” said the permanent secretary.
In order to provide relief to taxpayers and also boost aggregate demand for goods and services, Guvamatanga said the Treasury has approved a review of the local currency tax tables with effect from August 1, 2023.
“The tax free threshold has been reviewed from ZWL$91,666 per month to ZWL$500,000 per month whilst the highest marginal tax rate of 40 percent now applies on income above ZWL$15 000 000 per month,”he added.
One consumer, Harry Nkomo said it was “about time that revision happened. Somehow I expected it in a supplementary budget. The National Budget announced last year on November 22, 2022 was $ZWL4.5 trillion, which is less than ZWL$1billion now at the current official rate.”
However, Athan Sibanda, observed that if the government had revised this in January 2023, “it could have relieved a lot of formal employees but now it’s just another electioneering gimmick most salaries will be paid after the elections and that says something.”
