Gvt defends tax increases
7 December 2023
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The government of Zimbabwe has defended the proposed increase in taxes and fees included in the 2024 National Budget, stating that they are necessary to provide critical services across the country. The budget includes plans to raise tollgate fees, and passport fees, and introduce a wealth tax, and a tax on soft drinks, among other measures. Some citizens have expressed displeasure with these proposals.

Finance and Investment Promotion Minister, Professor Mthuli Ncube, claims that the aim of increasing passport fees is to ensure that passport services are accessible to all parts of the country, according to ZBC News.

He said:

When this is done, we will definitely review the fees downwards. As for the proposed increase in tollgates, we want to upgrade our roads, for instance, the Bulawayo-Victoria Falls which is being attended to. It is costly to construct roads it needs lots of money. As for the wealth tax, Zimbabwe like most countries in Africa has challenges with inequality and wealth tax is one way of redistributing the wealth and we have linked it to the value of property. Money in wealth tax will be used to develop urban infrastructure such as water which is currently a challenge.

We have since increased royalties for platinum and lithium to 7% from something that was as low as 2.5 %, that was progress. In the budget, I propose that there must be further beneficiation for instance, lithium must be refined to lithium carbonates.

If this is not done, a company will pay an export tax as a penalty for meeting the beneficiation target. Once the minerals are beneficiated like that, will earn more in export earnings and that’s positive for the country.q

The government’s statement about increasing passport fees to ensure accessibility is unclear. It is also unclear how the government plans to use the passport fees, especially considering that in 2021, they engaged a security printing company, Garsu Pasaulis, to set up modern infrastructure for producing new e-passports and other identification documents in a build, own, operate, and transfer (BOOT) deal.

Typically, in a BOOT model, the company invests its own resources and recoups the costs during its operation of the facilities. Therefore, it is unclear why the government needs to increase passport fees if the infrastructure has already been established.

Several people have criticised the proposed budget, saying it takes too much money from citizens who are already heavily taxed. Some argue that taxes in other countries are justified because they receive good services in return, but in Zimbabwe, service delivery is poor or nonexistent.

They believe their taxes are being misused. The Reserve Bank of Zimbabwe governor, John Mangudya, defended the proposed budget saying that Zimbabwe has had less access to credit from international financial institutions, so the government needs to find revenue from within the country to meet its financial obligations.