tendai biti 25-11-10 ed.jpgConsumers are set to brace for trying times ahead as Finance Minister, Mr Tendai Biti has unveiled more tax on selected imported goods while marginally increasing income tax-free thresholds.

 

Presenting a US$4 billion 2012 National Budget, Minister Biti retained duty on selected imported goods as well as increasing  to  40,3% duty on imported textile and clothing goods up from 40,1%, in a move likely to  fuel inflationary pressures.

 

However, the tax free threshold on incomes was increased from US$225 to US$250, while tax free bonus threshold was increased from US$500 to US$700.

 

 

Although workers have at least been afforded to smile for a while, it is the introduction of taxes on some selected imported goods that is likely to adversely affect the purchasing power of consumers.

Duty on some basic goods has been retained in a budget largely focussed on consolidating micro-economic stability, boosting public sector investment and ensuring food security in the country.
 
The Finance Minister allocated US$226,7 million for the agricultural sector and proposed to launch a three year rolling fund for the sector to avoid disrupting agriculture activities. He acknowledged the importance of supporting the agricultural sector, which he said requires US$2 billion capital injection for the country to realise its full contribution to economic development.

 

US$56 million was also allocated for the procurement of 500 metric tonnes of grain and US$15 million for the resuscitation of irrigation schemes around the country, while US$2,5 million was set aside for livestock production.

 

Mr Biti said the country’s economy is expected to grow by 9,4%, with an inflation rate of less than 5% next year.

 

Mining, agriculture, manufacturing and tourism are anticipated to be the major drivers of economic growth.

 

On mining, Minister Biti said the sector, which contributed 50% of the total exports in 2011, is expected to grow by 33% mainly through diamond sales, which are expected to contribute an estimated US$600 million to the fiscus.

 

Other highlights of the 2012 National Budget include a US$707 million allocation to the education sector, a US$5 million funding allocation for Zimbabwe Broadcasting Corporation digitalisation programme, retention of custom duty on selected raw materials, as well as a US$40 million package for distressed firms.

 

The Finance Minister also set aside money to fund the constitutional making process and the referendum, operations of the Global Political Agreement and the Organ for National Healing, Reconciliation and Integration.