$58,2 trillion Budget unveiled…wealth, sugary beverages taxes introduced
Nqobile Tshili, [email protected]
THE Treasury has introduced new taxation on wealth and sugary beverages including alcohol starting January next year while the US$300 Covid-19 cushioning allowance paid to civil servants will be converted to salary and subjected to taxation.
The taxation on sugary beverages is meant to increase their cost while promoting a reduction in their consumption as the country aims to minimise the risk of contracting non-communicable diseases.
The Wealth Tax will be levied at a rate of one percent of market values of residential properties worth US$100 000 and above to encourage inclusive taxation while senior citizens aged 70 and above will be exempted from this tax.
The Government introduced a US$75 Covid-19 cushioning allowance in 2020 and has progressively increased it to US$300. However, since it was an allowance, the income was not subjected to taxation.
Presenting the $58,2 trillion 2024 National Budget Statement in Parliament yesterday, Finance, Economic Development and Investment Promotion Minister, Professor Mthuli Ncube, said the new levy on the sugar content of beverages was in response to growing concerns about the adverse effects of consumption of sugar, particularly in beverages.
He said Zimbabwe will not be the first country to introduce the sugar content tax as it has been done elsewhere including countries in the Sadc region.
South Africa introduced the “sugar tax” or Health Promotion Levy in April 2018 to counter the rising effects of obesity and diabetes, among other related things.
Prof Ncube said the funds derived from the levy will be used for treatment of cancer.
“The consumption of high sugar content beverages is linked to increased risk of non-communicable diseases. It is, thus, necessary to discourage the consumption of high-sugar content beverages,” he said.
“Hence, I propose to introduce a levy of US$0,02 per gram of sugar contained in beverages, excluding water, with effect from 1 January 2024. Funds derived from this levy will be ring-fenced for therapy and procurement of cancer equipment for diagnosis.”
While ensuring that everyone contributes to the fiscus in line with their levels of income, Prof Ncube said proceeds from the Wealth Tax will be channelled towards improving service delivery in urban areas.
“I propose to introduce a Wealth Tax levied at a rate of one percent of market values of residential properties with a minimum value of US$100 000,” he said.
“Resources derived from the levy will be ring-fenced towards urban infrastructure development, in particular roads, water, sewer, and community health centres.
“Principal Private Residential properties owned by elderly persons above 70 years will, however, be exempt from the tax.”
As part of the remuneration review process for civil servants, Prof Ncube said the Government will convert the current Covid and cushioning allowances, aggregating to US$300, to be part of the pensionable emoluments across the board, effective January 2024.
Meanwhile, the minister allocated 1,4 trillion to the Public Service Commission (PSC) saying this was central to the effective and efficient delivery of public services through the recruitment and development of civil service personnel.
“The budget has set aside $1,4 trillion to support interventions by the institution targeting Information Communication Technology infrastructure, particularly the human resources information management system, pension and payroll systems, procurement of buses for the service and other major infrastructure projects,” said Prof Ncube.
Further, he said starting January next year, the Government will review strategic fuel reserve levy as well as passport fees, and Central Vehicle Registry fees as it seeks to broaden resources to finance road infrastructure.
“I propose to review upwards, the Strategic Reserve Levy by US$0.03 and US$0.05 per litre of diesel and petrol, respectively with effect from 1 January 2024.
“Toll Fees are currently pegged between US$2 and US$10, depending on the type of vehicle. I, therefore, propose an upward review of toll fees on premium roads, that is, Harare-Beitbridge and Plumtree-Mutare and other roads, with effect from 1 January 2024,” said Prof Ncube.
“Revenue derived from the increased fees will be remitted to the Consolidated Revenue Fund.
“I further, propose that passport and selected fees charged by the Central Vehicle Registry be increased with effect from 1 January 2024. Additional revenue generated from the above measures will be ring-fenced towards road infrastructure development.”
To address the growing illicit trade in the manufacturing of cigarettes, Prof Ncube said the Government will introduce a digital platform that provides real-time, traceable, and authentic data on locally manufactured goods, which would be beneficial to the fiscus.
“Government, will, thus, explore implementation of a digital platform on locally produced goods, in particular, cigarettes,” he said. – @nqotshili