Finance Minister Mthuli Ncube is today expected to deliver his 2022 National Budget speech, as work is cut out for him to convince Zimbabweans that the ailing economy can be revived. His budget statement comes at a time when the economy is battling a myriad of economic challenges including a multiplicity of taxes, electricity shortages, rampant company closures, high unemployment rate, foreign currency shortages, inflationary pressures.
Analysts told our sister paper Business Times yesterday that Ncube, who will present the spending framework should also show commitment to curb government spending and rein in debt in today’s budget.
He also has to deal with low investment inflows, high cost of business and poor infrastructure.
Zimbabwe’s fiscal space is also severely constrained due to poor revenue inflows against the background of rising recurrent expenditure and a shrinking tax base.
Multiple analysts said Ncube should prescribe policies and measures to breathe life into the sluggish economy.
They said Ncube should also come up with measures that attract investors to revive the battered economy.
They said he should also deal with the cash-guzzling parastatals.
The bailout of perennial loss-making parastatals is expected to be a topical issue Ncube needs to address.
The State-owned companies have been draining fiscus through perennial bailouts.
They said Ncube should come up with policies that ensure they become financially self-sustaining.
This, they said, would ensure that fiscus is relieved from carrying the burden of perennial bailouts.
This could mean the government expediting the sale of some parastatals.
The presentation comes at a time when the economy is expected to grow by 7.8%.
The headwinds, analysts said, were strong.
They said the budget should be pro-poor and pro-productive with more focus on stimulating demand and economic activity.
They said the 2% tax on electronic transactions, which have been piling misery on citizens, should be scrapped as it is hurting the economy.
They said Ncube should also reign in the government’s huge debt and expenditure.
Economic analyst, Victor Bhoroma said Ncube should relook at the taxes.
“There is a need to reduce direct and indirect taxes paid on fuel. The pump price of fuel at US$1.40 per litre for petrol & US$1.38 per litre for diesel makes Zimbabwean fuel the most expensive in Southern Africa while ranking it high amongst the most expensive in Africa.
There is also a need to review civil service salaries in line with the Total Consumption Poverty Line and Inflation,” economic analyst Victor Bhoroma said.
He added: “Since the IMMT [intermediated money transfer tax] is also levied on formal businesses that pay corporate tax, the budget should make the transaction tax be deductible from corporate tax or Value Added Tax as is the case with other transaction taxes. This will provide relief to all hard-pressed tax compliant businesses.”
Independent economist Rodrick Chisango said: “Zimbabwe companies are overtaxed. The minister (Mthuli Ncube) should remove some of the taxes. Companies are overtaxed and the tax policy should boost production.”
He added: “The budget should be pro-poor. He (Ncube) should come up with policies that stimulate investment and unlock employment opportunities.”