The Sunday Mail
Online News Editor
Professor Mthuli Ncube, the Minister of Finance and Economic Development, on Thursday presented worker-centric Budget proposals for 2020, which saw tax bands and tax-free thresholds moved upwards.
Sympathetic to the shrinking disposable income available to the toiling masses, Minister Ncube upped the tax-free threshold from $700 to $2 000 as well as adjusted the tax-free bonus threshold to $5 000.
Themed “Gearing for Higher Productivity, Growth and Job Creation”, the Minister made a number of proposals that include tax relaxation for companies that will be youth-centric in employment creation.
“Under the 2020 Budget, a fiscal incentive is being introduced to support employers who generate jobs for our young job seekers. Any additional job created will attract a percentage tax rebate to the employer, linked to the employee’s salary,” the Minister proposed.
Turning to worker welfare, he said “the prevailing inflationary environment has eroded incomes for most workers. Wage compression has affected aggregate demand with its negative effect on gross domestic product. Government is committed to ensuring a decent standard of living for its public servants, and will take into account inflationary developments in the ongoing cost of living adjustment negotiations.”
He added that “the 2020 National Budget marks the exit from austerity to growth stimulation and employment generation era through promotion of production-oriented investment and productivity, without losing focus on fiscal responsibility.”
To this end, the Minister said whilst the Government expects to collect revenue of around $58,6 billion, against an expenditure of $63,6 billion, this will imply a budget deficit of around 1.5 percent of gross domestic product.
Similarly, a modest growth rate of 3 percent is projected, which is in stark contrast to the negative 6 percent growth rate recorded this current financial year.
He said the main fiscal policy for the coming financial year will be anchored in managing expenditure within the allocated supported by non-inflationary financing as well as complemented by a tight monetary policy framework.
To address market distortions, as well as attend to arbitrage that is obtaining in the grain supply chain, the Minister proposed that with effect from January 2020, the Government removes the existing grain marketing subsidies for maize and wheat, that were being provided to grain millers through the Grain Marketing Board.
“The intervention will see GMB selling wheat and maize at market prices, with grain millers having an option to either import or purchase grain from GMB. This means the prices of basic commodities such as bread and mealie meal may adjust,” he noted.
Subsidies for mass transportation will continue to exist, with the Government forging ahead with its plans to capacitate public transport operator, Zupco, through acquiring conventional buses.