Zimbabwe Finance Minister Herbert Murerwa announced new measures on Thursday to raise state revenues in the face of rampant inflation, including extra levies on fuel and the construction of toll gates on all major highways.
Faced with the world’s highest inflation rate of 1 185%, President Robert Mugabe’s government is confronting demands for Z$327-trillion ($3,2-billion) in extra expenditure, Murerwa told Parliament.
”This is unsustainable for the government and therefore there is a need to rationalise,” he said.
Taxes on gasoline and diesel will increase and eight new toll gates will be added, he said.
However, Murerwa offered relief to taxpayers, raising the income threshold to pay a minimum 15% from Z$7-million ($69) a month to Z$20-million ($198) a month. The top rate of 35% will now be paid on incomes of more than Z$54-million ($534) a month.
Independent economist John Robertson said this still makes Zimbabweans among the highest-taxed people in the world. ”Only a domestic servant would be earning less than Z$20-million,” he said.
Murerwa said he hopes his tax-relief measures will put Z$35-trillion ($346-million) back in the pockets of Zimbabwe’s 12-million people, ”thereby enhancing their purchasing power”.
He made no mention of a possible devaluation of Zimbabwe’s currency — worth $2 when Mugabe came to power at independence in 1980 but now trading at an official rate of Z$101 000 to the United States dollar and more than Z$250 000 on the black market.
Robertson said he expects Reserve Bank Governor Gideon Gono to address the issue in a policy statement on Monday.
Murerwa said Z$28,6-trillion ($283-million) will be allocated to what the government terms ”quick-win solutions” for Zimbabwe’s economic woes, identified under a newly launched National Economic Development Priority Programme. Targeted sectors include agriculture, mining, manufacturing and tourism.
”There is nothing really surprising except his belief that these various methods of overcoming the problem are going to work,” said Robertson. ”The Z$28-trillion doesn’t seem to be a quick win but a quick lose — it costs a fortune before we start.”
Robertson and other government critics trace Zimbabwe’s crisis to chronic overspending during the 1990s and a breakdown in property rights, culminating in the seizure of more than 5 000 white-owned commercial farms for redistribution to black Zimbabweans.
Evictions of the last remaining white farmers continue despite official reports that much of the seized farmland that was once among the most productive has been vandalised and left derelict. — Sapa-AP