As it is a noble idea to revise a national budget considering the economic outlook prevailing in the country, but various sections of the supplementary budget cannot go unchallenged.
The Zimbabwean economy is now nose-diving, receding at an unimaginable rate. With inflation figures hovering above 175%, its highest mark in a decade.
The prices of basic goods have more than doubled in the first half of the year, an indication that all is not well in our beloved nation.
The following are some of the notable highlights from the budget review but finance minister, Professor Mtuli Ncube.
Tariffs and Fees hikes
The finance minister increased electricity tariffs, toll fees, and other, vehicle registration and change of ownership fees during a time when prices of all other goods in the economy are increasing.
The electricity tariffs, for example, were increased from 9.86 cents to 27 cents per kWh. Toll fees were increased to $10 for light motor vehicles from $2 representing a 400% increase in the fees.
Heavy vehicle will fork out $50 to pass through a toll gate.
The fuel tax was also increased from 16% and 19% of the landed cost to 40% and 45% of the landed cost.
Route authority application fees have been increased from $25 to $125, operator’s licence application fee has been reviewed to $250 from $50.
Original motor vehicle plates now cost $400 from $80, while changing number plates will attract a similar fee.
A review of non-taxable income from $350 to $700
He further increased the transaction tax threshold from $10 to $20.
Effects on the economy and standards of living.
The announcements of fees and tax hikes will impact negatively the Zimbabwean economy. Firstly an increase in fuel tax will see the pump price of both petrol and diesel going up.
Fuel dealers will try to guard their profit margins by increasing the fuel prices and this has ripple effects of increasing prices of other goods across the economy since fuel is a major input.
Fuel prices have since increased two times in a week, and this announcement by the finance minister leaves a lot to be desired.
It is the ordinary Zimbabwean who will suffer under these conditions since the prices of basic goods will go up.
The rural teacher will not be spared as they will face some unscrupulous grocery dealers who will increase prices even if they hear a rumour of such budget announcements.
Increase in toll fees will also see transport fares going up. Transport operators are more likely to increase transport fares by a bigger magnitude since they are struggling to buy the now expensive and scarce fuel and now the increased toll fees. One would then wonder how the teacher will travel to and from work.
It is out of this world to expect one to report daily for duty under such circumstances.
It still remains an insult to increase tax-free income to $700 whilst a civil servant, particularly a teacher is not earning that much. It is not benefiting at all.
What it simply means is that anyone earning less than the $700, which is far below the poverty datum line, is grossly incapacitated and the salaries should also be reflective of the interbank rate.
The finance minister said that the increase in government fees was to make service provision possible as he aligns prices with the interbank rate while acknowledging that the Zimbabwean RTGS dollar has lost its value against the US Dollar.
What is so surprising is that the same minister is refusing to align salaries of civil servants to the same interbank rate upon which prices of goods and services are based.
It is so disturbing to note that he is actually aware of the true value of the Zimbabwean dollar but refusing to align salaries to the interbank rate.
Surprisingly teachers and other civil servants were given cushion allowances almost equal to a monthly salary. Here the government is indirectly acknowledging that the salaries are now useless, falls way below normal.
A transaction tax-free threshold now at $20 is still an insult. The transaction tax must be removed as it is another way of burdening an overburdened civil servant.
Just imagine raising it to $20, which is not even enough to buy a 2-litre bottle of cooking oil. Seriousness is needed by the authorities in this respect.
The same finance minister announced sometime in June 2019 that prices will begin to fall in July 2019. This is the same finance minister who is going round and about saying austerity is for prosperity.
Instead of falling prices, he is the one who is going on national television announcing further price increases under the disguise of budget presentation.
It not proper to achieve economic growth by milking the people. The government is failing to seek other sources of income and now preferring to milk ordinary citizens, leaving them begging.
Demand management policies are not effective. What is needed is to manage the supply, be it of fuel, forex, and goods and services.
It is now up to the civil servants, the teachers to liberate themselves by advocating for interbank linked salaries. It is now time to face the government head-on using legal means. No to the transaction tax. No to demand management policies.
Paper was prepared by Oliver Chipfuwamiti. He is an independent Economist, an ARTUZ member and can be contacted on 0773517256 or email email@example.com.
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