By Alois Vinga
ZIMBABWE’s working class will continue to feel the pinch of anti-poor government policies in the coming year following Finance Minister Mthuli Ncube’s decision to set the income tax-free threshold at an equivalent of a paltry US$103.
The working class is already reeling under appallingly low salary brackets trailing far behind the Poverty Datum Lines (PDL).
Official records from the trade unions fraternity indicate that a number of workers are earning salaries not exceeding the official rate equivalent to US$200.
The decision by the Reserve Bank of Zimbabwe to devalue the local unit by 43% recently further eroded the workers’ salaries.
A recent study by research and stockbroking firm, IH Securities established that working poverty in Zimbabwe has risen to 35,3% confirming the hardships being experienced by the country’s labour force.
The International Labour Organisation (ILO) defines working poverty as a situation where individuals are employed in full or part-time jobs but still struggle to make ends meet, live below the official poverty line and claim income-related welfare benefits.
But presenting the 2025 National Budget blueprint, Thursday Ncube turned a blind eye on the hardships endured by the working class, choosing instead to peg the tax free threshold at the bare minimum.
“Mr Speaker Sir, current legislation exempts the first US$100 income earned by employees, hence, any subsequent income is taxed at rates ranging from 20%, up to a marginal income tax rate of 40% for incomes above US$3 000 per month.
“The equivalent exempt portion in local currency and the tax bands thereof have, however, been affected by the recent macroeconomic developments, hence, the need to provide relief to taxpayers.
“In view of the above, I propose to review the local currency tax-free threshold to ZiG2 800 per month and accordingly adjust the tax bands as follows, with effect from 1 January 2025,” he said.
Effectively ZiG2 800 is equivalent to about US$103 using the official exchange rate.
Thereafter, income in the band of 2 801 to 8 400 a total of 20% tax will be applied cascading up to 40% on sliding scale for incomes above ZWG84 000.