FINANCE, Economic Development and Investment Promotion minister Mthuli Ncube yesterday introduced new taxes, further squeezing the already burdened taxpayers to raise revenue to meet growing needs.
The taxes are effective January 1, 2025.
Presenting the ZiG276,4 billion 2025 national budget at the New Parliament Building in Mt Hampden yesterday, Ncube said the new batch of taxes contained in the budget targeted punters, fast foods and plastic bags.
There will be a 10% withholding tax on gross winnings of sports punters “to embrace punters into the tax base”.
“I propose to introduce a 10% withholding tax on gross winnings of sports betting punters, with effect from January 1, 2025. The withholding tax will apply on both
in-house and online sports betting managed by land-based bookmakers,” Ncube said.
Betting shops are charged a 3% tax on gross takings from betters, yet punters did not pay tax on their winnings, he said.
Ncube has also proposed a fast foods tax on the value of the food items sold by fast food retail outlets and restaurants at a rate of 0,5% on the sales value saying the consumption of highly-processed food has been identified as one of the factors responsible for the prevalence of obesity and associated non-communicable diseases, raising the need for government to promote responsible consumption of such foods.
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The tax is targeted at burgers and hot dogs, shawarma, French fries, chicken, doughnuts and similar products and tacos.
In his presentation, Ncube said a 20% plastic carrier bag tax would be introduced on the sale value of plastic bags, effective in the new year.
“In order to promote the use of bio-degradable packaging, I propose to introduce a 20% plastic carrier bag tax on the sale value, with effect from January 1, 2025.”
In order to support persons promoting the recycling of plastics, Ncube proposed to exempt from withholding tax any supply of recyclable plastics, provided the aggregate amount supplied does not exceed US$5 000 in any year of assessment.
Ncube removed the tax holiday for the first five years for investors in a special economic zone pursuant to the need for creating a balance between investment, export promotion, creation of global value chains, as well as commensurate contribution by beneficiary companies to the fiscus. The tax holiday will be replaced by an effective corporate income tax rate of 15%.
Ncube buckled under pressure from beverage manufacturers and reduced sugar tax on cordials to create a level playing field between ready-to-drink beverages and the cordials.
The tax will be slashed to US$0,0005 per gramme with effect from January 1, 2025 from the current US$0,001/g.
“Representations from manufacturers indicate that cordials, due to their concentrated nature, have a higher sugar content, attract a higher effective tax as compared to ready-to-drink beverages,” Ncube said.
“Common practice, however, requires that the tax be based on the sugar content of the diluted product in order to create a level playing field between ready-to-drink beverages and cordials.”
He exempted liquefied petroleum gas from value-added tax to reduce the cost of the alternative energy source amid rolling power cuts.
Ncube said the Sadc region was facing a deficit in electricity supply leading to prolonged load shedding.
“In that regard, liquefied petroleum gas has served as an alternative energy source, especially for cooking and heating during power outages.
“In addition, there has been a transition from traditional fuels such as firewood or charcoal, which are associated with indoor air pollution, deforestation and environmental degradation,” he said.
Government, which is struggling to remunerate its current workforce, plans to freeze recruitment.
The money available for salaries in 2025 will be 56,4% of revenue, breaking government policy of keeping salaries under 50% of revenue.
Ncube said: “To address this unsustainable position, revenue enhancement measures will be implemented, while also limiting the recruitment of additional personnel only to critical sectors such as health and education.”
On the power crisis being faced by the country, the Treasury boss seemed not to have immediate relief measures, only saying he will increase the budget for energy projects “to facilitate investment in power generation, transmission and distribution network”.
He said projects include the refurbishment of Hwange’s Unit 5 next year, as well as new projects in the mining sector, which would ease pressure on the grid.
Ncube said the implementation agreements given to power producers should get projects worth 1 500 megawatts off the ground by 2026, adding that next year government planned to build 100 mini-solar grids, with funding from China.
