The Zimbabwe Banks and Allied Workers Union (ZIBAWU) has petitioned Finance Minister, Mthuli Ncube, urging him to expand the income tax threshold bracket to ease the burdens of over taxation experienced by workers.
This follows the move by the government to widen the non-taxable bracket from ZW$10 000 in 2021 to ZW$25 000 after another petition by ZIBAWU sent to the Treasury last year prior to the 2022 national budget announcement.
The bankers group also raised concerns over the fact that the tax brackets have remained relatively compressed in real value terms compared to what they were during the US$ era.
It was submitted that owing to inflationary pressures, the current bracket places the majority of the workers to tax inequalities as they would be obliged to pay more.
In a letter seen by NewZimbabwe.com dated May 31 2022 addressed to Ncube, an urgent call to broaden the tax bracket was made.
“We request that you revise the rates of income tax by considering the following proposal; that tax brackets in both US$ and ZW$ be widened in line with inflation and currency depreciation. Where employees are paid in dual currencies, the buyer willing seller exchange rate can be used to determine applicable tax in ZW$,” said ZIBAWU.
The union said such measures are set to ensure just and fair tax burdens to the employees and the reduction of tax evasion schemes, which will be prudent to increase the minimum t77axable income to a figure above Poverty Datum Line (PDL) to 2013 levels of US$350.
The letter further reads: “This will address two main policy problems. It alleviates a big portion of the working poor whose salaries are below the PDL and facing numerous hardships, which is good for social progress.
“Furthermore, it will increase domestic aggregate demand and help in economic recovery. It is our considered view that reduced revenue will still be recovered through other taxes and increased economic activities.”
The calls come at a time when the majority of the country’s workers have received inflation linked salary increases following the depreciation of the local currency, which has fallen by over 50% on both the official and parallel market.