shloboe boe
Sikhulekelani Moyo, [email protected]
PROMINENT economist and former Reserve Bank of Zimbabwe (RBZ) Monetary Policy Committee member, Mr Eddie Cross, has praised Zimbabwe’s revenue collection system, saying it is contributing about 20 percent to the gross domestic product (GDP).
Speaking during a recent post-budget breakfast meeting in Bulawayo, Mr Cross described the tax initiatives as fair and not overly burdensome to the private sector.
“The revenue collection system of Zimbabwe, at about 20 percent of GDP, is fairly average for Africa. Many African states collect significantly less than that,” he said.
“Africa’s average is about 16 percent, so our tax authority is doing well in collecting taxes from the population. At 20 percent, it’s not an excessive burden on the private sector. While we might feel heavily taxed, I believe the overall tax burden is reasonable.”
However, Mr Cross raised concerns about the taxation of employees, noting that the pay-as-you-earn (Paye) system starts at incomes as low as US$100 per month. He urged the Ministry of Finance, Economic Development, and Investment Promotion to revise the Paye threshold upwards. He said increasing the Paye tax ceiling significantly would inject additional spending power into the economy, benefitting the broader market.
Mr Cross said the multiplier effect of this increased expenditure would lead to substantial improvements in the general economy. He also commented on the challenges faced by the 2025 National Budget, describing it as a “tough call” due to high demands on the Treasury. He pointed out that 55 percent of the budget is allocated to salaries, benefits and pensions — a figure much higher than the targeted 35 percent.
“Spending 35 percent of the national budget on salaries and wages is already above what many developing countries allocate to their civil service. At 55 percent, we face a significant burden in this area,” he said.
Despite these challenges, Mr Cross commended the 2025 National Budget for meeting critical benchmarks, including allocating 15 percent of the budget to health, as stipulated by the Abuja Declaration and 20 percent to education, in line with the Dakar Declaration of 2000. — @SikhulekelaniM1.
