By A Correspondent — Prices of basic commodities are expected to rise sharply after Finance Minister Mthuli Ncube on Thursday increased the Value-Added Tax (VAT), piling more pressure on already struggling consumers.

Unveiling the 2026 National Budget, Ncube hiked VAT to 15.5%, a move government says is necessary to raise an additional US$1.47 billion next year. Treasury projects total revenue collection of US$9.4 billion in 2026, up from this year’s US$7.93 billion.

But for ordinary citizens, the VAT hike spells deeper hardship. VAT is a consumption tax, meaning it is applied to almost every transaction involving goods and services — from groceries and toiletries to transport and household basics. Unlike income tax, which targets earnings, VAT hits everyone equally, regardless of their income level.

This means a low-income family buying mealie-meal or cooking oil will now pay more for the same basket of essentials, worsening the cost-of-living crisis. Businesses — especially in the formal sector — pass the tax directly to consumers, leading to immediate price increases across the retail chain.

The timing of the hike has also raised concern. It comes just as the Zimbabwe Tax Perception Survey 2025 revealed that nearly nine in ten citizens believe the tax burden far exceeds their ability to pay. Conducted by the Zimbabwe Taxpayers Platform, the survey showed widespread frustration with what many see as excessive taxation and a proliferation of statutory levies that erode disposable incomes and stifle business activity.

Although government argues that the VAT increase will allow for a partial reduction of the intermediated money transfer tax (IMTT), analysts say any relief will be minimal compared to the impact on everyday purchases. The formal sector — which accounts for just 23.9% of the compliant economy — will continue to shoulder the administrative burden of collecting VAT, while the costs are ultimately borne by consumers across both the formal and informal sectors.

With salaries stagnant and inflation eroding spending power, the VAT hike is expected to trigger another wave of price increases, deepening economic hardship for millions of Zimbabweans already living on the margins.