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By Fight Inequality Alliance Zimbabwe
On Thursday 28 July 2022, the Minister of Finance and Economic Development is expected to be presenting the 2022 Mid-Term Budget and Economic Review in line with Section 7 (2) (a) of the Public Finance Management Act and Section 9 (1) of the Public Finance Management (General Regulations) of 2019 which mandates the Minister to produce an economic and fiscal update for half of the financial year being the period ending 30th June each year. The 2022 Mid-Term Budget and Economic Review will highlight the performance of the economy and the 2022 Budget during the first half of the year, thus January – June 2022 together with macro and fiscal outlook to year-end. This provides an opportunity for the Minister to make any adjustments to the previous fiscal plans and request a supplementary budget if need be.
It is an undeniable fact that poverty and inequality are deepening with the World Bank having projected that more than 7.9 million Zimbabweans are living in extreme poverty and failing to meet the US$29.80 food poverty line for each person a month. According to the United Nations Development Programme (UNDP)’s Human Development Report for 2021, Zimbabwe’s Human Development Index (HDI) value for 2019 is 0.571, which put the country in the medium human development category and positions it at 150 out of 189 countries and territories.1
Factoring in the Inequality-adjusted HDI (IHDI), Zimbabwe’s HDI drops to 0.441 which shows the level of inequality in the country. The Minister must therefore be guided by these realities and statistics and align all fiscal and economic interventions towards poverty and inequality reduction in light of Sustainable Development Goals 1 and 10 respectively.
It remains the Alliance’s view that any review of the economy in general and the budget, in particular, must be done in relation to the prevailing socioeconomic living conditions of citizens. Thus, the Alliance hopes that the 2022 Midterm and Economic Review will be sensitive and responsive to the plight of citizens. In light of social and economic challenges currently faced by the majority of citizens, below is what we expect the Minister to consider in the 2022 Midterm Budget and Economic Review:
1. Robust Tax Relief Measures
Move towards a more progressive, fair, and just tax system capable of facilitating shared growth and wealth redistribution for the equitable benefit of all Zimbabweans. This must include:
Reviewing downwards Withholding Tax which was increased from 10% to 30%. The increase was meant to enforce tax compliance but the move has done more harm than good to ordinary citizens as goods and services providers have simply shifted the burden of taxation to the poor consumers through price increases.
Scrap or at least peg the 2% tax above the poverty datum line.
Review upwards tax-free threshold so that consumers have more disposable income cognizant of inflationary patterns and market volatility and align the thresholds to the poverty datum line.
Introduce a Wealth Tax as a morally just measure and an important vehicle toward the attainment of tax justice in Zimbabwe by redistributing concentrated wealth and economic power and ensuring that each individual pays according to his or her capacity to pay.
2. Strengthen Social Safety Nets
The COVID-19 pandemic, climate change, and the highly inflationary environment have increased social vulnerabilities. The Alliance, therefore, expects the Minister to revisit the current social assistance framework and ensure that the quality and quantity of social safety nets and beneficiaries improve and increase respectively and cover at least 50% of the poorest population. Therefore;
The Minister must strengthen government support to the poor’s income and consumption through cash, food, and other means to help the vulnerable individuals and households cope with increasing poverty and vulnerability.
A review of social protection mechanisms must include coming up with complementary programs like supporting livelihood activities in informal trading and enhancing investment in key social services like health and education.
3. No to Surplus Announcement rather we have a Supplementary Budget
It is unfortunate that since the implementation of austerity measures during the 2019 fiscal year, the government has been obsessed with announcing surpluses yet the material living conditions of ordinary Zimbabweans are not doing any better with poverty rising. A budget surplus must always be congruent to the socio-economic conditions of vulnerable groups. Given the current economic shocks and inflationary pressures, a Supplementary Budget is inevitable to address the plight of ordinary citizens and the challenges faced by the productive sector of the economy.
About the Fight Inequality Alliance Zimbabwe
The Fight Inequality Alliance Zimbabwe is a broad-based network of social movements, women’s rights groups, faith-based organizations, labor unions, and individuals committed to challenging and reversing the unfair distribution of wealth, power, opportunities, social status, access, and control of resources in Zimbabwe. The Alliance exists to strengthen collective action to transform Zimbabwe’s highly unequal society and provide a common platform of action to build a just, equitable, and prosperous nation. The Fight Inequality Alliance envisions a Zimbabwe in which wealth, power, opportunities, social status, access, and control of resources are distributed in a just and equitable manner to enable all Zimbabweans to enjoy their full rights, dignity, and an acceptable standard of living as full citizens of their own society.