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Zimbabwe announces new taxes, tolls
Associated Press (AP)
July 27, 2006

http://www.zwnews.com/issuefull.cfm?ArticleID=14874

Harare - Finance Minister Herbert Murerwa announced new measures Thursday to raise state revenues in the face of rampant inflation, including extra levies on fuel and the construction of toll gates on all major highways. Faced with the world's highest inflation rate of 1,185 percent, President Robert Mugabe's government is confronting demands for 327 trillion Zimbabwean dollars in extra expenditure, Murerwa told Parliament. "This is unsustainable for the government and therefore there is a need to rationalize," he said. Taxes on gasoline and diesel will increase and eight new toll gates will be added, he said. However, Murerwa offered relief to taxpayers, raising the income threshold to pay a minimum 15 percent from 7 million Zimbabwe dollars a month to 20 million Zimbabwe dollars a month. The top rate of 35 percent will now be paid on incomes over 54 million Zimbabwe dollars a month. Independent economist John Robertson said this still made Zimbabweans among the highest taxed people in the world. "Only a domestic servant would be earning less than 20 million," said Robertson.

Murerwa said he hoped his tax relief measures would put 35 trillion Zimbabwe dollars back in the pockets of Zimbabwe's 12 million people "thereby enhancing their purchasing power." He made no mention of a possible devaluation of Zimbabwe's currency - worth two U.S. dollars when Mugabe came to power at independence in 1980 but now trading at an official rate of 101,000 to the dollar and over 250,000 on the black market. Robertson said he expected Reserve Bank Governor Gideon Gono to address the issue in a policy statement Monday. Murerwa said 28.6 trillion Zimbabwe dollars would be allocated to what the government terms "quick win solutions" for Zimbabwe's economic woes, identified under a newly launched National Economic Development Priority Program. Targeted sectors include agriculture, mining, manufacturing and tourism.

"There is nothing really surprising except his belief that these various methods of overcoming the problem are going to work," said Robertson. "The 28 trillion dollars doesn't seem to be a quick win but a quick lose - it costs a fortune before we start." Robertson and other government critics trace Zimbabwe's crisis to chronic overspending during the 1990s and a breakdown in property rights, culminating in the seizure of more than 5,000 white-owned commercial farms for redistribution to black Zimbabweans. Evictions of the last remaining white farmers continue despite official reports that much of the seized farmland that was once among the most productive has been vandalized and left derelict.

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