Zimbabwe’s current income tax free threshold stands at US$160, a figure way below the Poverty Datum Line (PDL) of US$481, according to the Consumer Council of Zimbabwe.
Civil servants who form the majority of the country’s workforce earn monthly salaries that are below $200 against US$481 which is the current PDL.
Wellington Chibhebhe, the Zimbabwe Congress of Trade Union (ZCTU) secretary general told RadioVOP on Tuesday that the tax free threshold should be set at PDL to avoid job protests over salaries.
“The income tax free threshold of US$160 still remains low relative to the PDL. Ideally, it should be set at the PDL to cushion workers and avoid unnecessary industrial actions over low salaries,” Chibhebhe said.
Biti has however said the nation’s economy is in no state to sustain high salaries while the International Monetary Fund (IMF) recently called on the Finance Minister to slash the wage bill, which it said was high and fuelling inflation.
The country’s inflation rate has quickened to 6% in less than six months when the nation was witnessing deflation trends.
Chibhebhe said the Finance Minister should also reduce the tax rates for individuals to a minimum of below 30% in line with regional trends.
He said: “The position of ZCTU is that the tax rate should begin at 10% and end at a maximum rate of 30%” to cushion long suffering workers. It is interesting to note that while corporate tax has been reduced from 30% to 25%, individuals will are taxed at a punitive minimum rate of 35%.
“This is unfair since companies are in business to make profits and most of their expenditures are tax deductible. In essence, companies spend their earnings before they are taxed while individuals are tax before spending their earnings.”