Zimbabwe`s economy has undergone a robust transformation over the past five years and the 2024 National Budget will focus on consolidating these gains by laying the foundation for inclusive growth. Finance, Economic Development, and Investment Promotion Minister Professor Mthuli Ncube has raised tax and bonus tax-free thresholds in a bid to provide much-needed relief to ordinary Zimbabweans whose incomes have been eroded by inflation and also to raise money to pay for everything from road rehabilitation to cancer treatment.
One of the highlights of the review is on Civil Servants whose COVID-19 and Cushioning allowance of USD 300, previously tax-free will be converted to pensionable salary.
In March 2023, the Government awarded civil servants with a 100% non-taxable salary increment and reviewed their COVID-19 allowance from US$ 200 to US$ 250, except for health sector workers who had already received an earlier increment. Teachers were also awarded an additional of US$ 80 monthly teaching allowance, while government pensioners cushioning and Covid-19 allowances were reviewed from US$ 90 to US$ 100.
New amendments have been proposed where beginning in January 2024, civil servants are to have the COVID-19 and Cushioning allowance being converted to a pensionable salary of USD 300.
The introduction of the pensionable salary will result in the reduction of the overall net income for civil servants as a result of the tax effect while the Government’s tax income will increase. Due to the already low salaries being received by civil servants, these amendments will have far-reaching negative effects on their spending power.