Workers have expressed dissatisfaction with the government’s recent review of the tax-free threshold, which has been increased to $500,000 starting this month. They argue that there is nothing to celebrate because the majority of workers earn below that figure. The previous tax-free threshold was $91,666, with the highest marginal tax rate of 40% applicable to salaries of $15 million and above.
Japhet Moyo, the secretary-general of the Zimbabwe Congress of Trade Unions, criticised the government for ignoring the plight of the long-suffering workers. He stated that the new tax-free threshold fails to address the fundamental needs of workers and highlighted that anyone earning $500,000 is still below the poverty datum line. He told NewsDay:
They have done absolutely nothing. The new tax-free threshold does nothing with regards to addressing the fundamental workers’ needs.
You cannot tax the poor. Anyone earning $500 000 with the prevailing market rate is earning below the poverty datum line.
According to the Consumer Council of Zimbabwe, a family of six now requires $2.6 million per month to survive. Despite these rising costs, the average salary of the least-paid civil servants is $250,000, excluding US dollar allowances.
Various union representatives, including David Dzatsunga and Tecla Darangwe, expressed their disappointment with the review of tax brackets and called for an increase in salaries and a reduction in the tax-free threshold. They argued that the threshold should be indexed to the US dollar, considering its impact on the economy.
Obert Masaraure, the president of the Amalgamated Rural Teachers Union of Zimbabwe, criticized the review for not meeting their demands for US dollar salaries. He also raised concerns about the potential devaluation of the local currency after the elections.
Recent statistics indicate that the economy is moving towards dollarisation, with a significant portion of transactions, particularly for food purchases, being conducted in foreign currency. However, the government remains committed to the Zimdollar, despite calls for its abandonment.
A report by the Zimbabwe Coalition on Debt and Development emphasised the role of diaspora remittances in sustaining the economy, as many formal workers struggle to meet the poverty datum line.