Oliver Kazunga, Senior Business Reporter
Government has raised the tax-free threshold to $5 000 up from $2 000 monthly while those earning above $100 000 will pay 40 percent tax with effect from next month, Finance and Economic Development Minister Professor Mthuli Ncube said yesterday.

Presenting the 2020 Mid-term fiscal policy statement in Parliament, Prof Ncube said the tax-free threshold review was meant to cushion employees from high inflation induced by wage and salary increases.

Recently, the Government reviewed upwards the salary of its workforce from about $2 500 to $8 000 for the lowest paid employee. While all sectors of the economy were affected by the Covid-19 pandemic, there is variation in terms of severity, with sectors such as tourism, non-food manufacturing, mining, financial services, transport and distribution and education being adversely affected. On the other hand, health services, ICT, manufacturing of food stuffs and electricity and water had gains.

Some of the positives that have been registered so far include a budget surplus for the period January to June 2020 of about ZWL$800 million. Grain production increased by 24 percent from 852 000 tons to 1 060 000 tons in 2020, electricity generation during the first quarter of 2020 increased compared to the last quarter of 2019, with total electricity generated amounting to 1 294 GW/h, up from 1 226 GW/h resulting in reduced load shedding.

The Minister announced that workers were being cushioned through increasing tax-free thresholds. “In an effort to cushion employees from inflation induced by wage and salary adjustment, I propose to review the tax-free threshold from ZWL$2000 to ZWL$5000 per month. I further propose the tax band to begin at ZWL$50001 and end at ZWL$100 000 above 40 percent will apply and this is with effect from 1 August 2020,” he said.

The Minister said Government remains committed to implementing mitigatory measures to contain the impact of Covid-19 pandemic on the economy and interventions to limit further damage would continue to be reviewed.

Prof Ncube said Government came up with mitigatory interventions covering both prevention and support to productive sectors in order to save lives and livelihoods.

He said in order to save lives, Government has managed to unfreeze 4 713 posts in the public sector with a view to scaling up the response to the Covid-19 pandemic.

“Furthermore, resources were directed to alleviate the plight of vulnerable groups in our society who were most exposed under this Covid-19 crisis. Accordingly, resources to cushion one million vulnerable individuals were put in place and payments continue through the Social Welfare Department,” he said.

By end of June, Government had disbursed ZWL$1,8 billion towards various ministries, agencies and departments to tackle the Covid-19 pandemic.

By that time, it had also disbursed ZWL$738,5 million to the Ministry of Health and Child Care mainly to cover Covid-19 Risk allowances; additional employment costs from recruitment of additional staff to fight Covid-19, and capacity building of health staff training, among others.

Prof Ncube said the level of vulnerability during the lockdown increased and to mitigate against the effects of the lockdown, ZWL$50 million has been availed so far to support poor households.

“Furthermore, lockdown conditions required that all the homeless be placed in various shelters and ZWL$35,5 million was availed towards that whilst quarantine centres received ZWL$50 million,” he added.

The Minister said the 2020 Second Round Crop and Livestock Assessment Report indicates that grain production increased by 24 percent from 852 000 tons to 1 060 000 tons in 2020.

Traditional grains production for the 2019/2020 season is estimated at 152 515 tons which is 103 percent more compared to 75 209 tons in 2018/2019.

The increase is attributed to increased support extended to farmers under the Presidential Input Scheme, encouragement by the Government as well as capacity building of farmers.

For purposes of enhancing food security, this year Government seeks to expand the winter maize programme targeting to put 4000ha in low-lying areas of Masvingo, Matabeleland North and Mashonaland West.

Prof Ncube said the 2020/21 Presidential Input Scheme is targeting to support 1,8 million households to grow maize and traditional grains. The programme will be funded through the budget for procurement of inputs.

On the 2020/21 Summer Cropping Programme, Prof Ncube said Government is continuing the guarantee arrangement with the financial sector. The financial sector is expected to target highly productive farmers in irrigated and highly productive areas.

Turning to mining, the Minister expects the industry to perform well.

“Currently, mining sector contributes about eight percent of total GDP and has set a target of generating US$12 billion revenues by 2023 from as little as US$2,7 billion in 2017. Priority policy areas to attain this target and other Transitional Stabilisation Programme benchmarks include reviewing and updating mining legislation, enhancing exploration and investment in mining, modernisation and computerisation of the mining title administration system (mining cadastre), improving transparency in the mining sector and establishing a viable fiscal regime,” he said.

Prof Ncube said beneficiation and value addition of minerals to create more jobs and earn more foreign currency are priorities for the sector.

He said the manufacturing sector remains central for industrialising the country and top on the agenda are policy reforms to improve the investment environment.

“However, the sector continues to face investment deficit and other challenges relating to electricity and foreign currency supply and inflation. The Covid-19 pandemic also depressed the performance of the manufacturing industry by restricting production, distribution and consumption of goods and services, among other factors,” said Prof Ncube.