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Budget - Bill Watch 42 / 2009
December 05, 2009
of the 2010 Budget: Wednesday 2nd December
Tendai Biti ‘s 2010
Budget theme is Reconstruction with Equitable Growth and Stability.
He summed up the budget as “a pro-poor, broad based and inclusive
development framework” with “a strong emphasis on the
key issues of education, health and social services”.
Reintroduction of Zimbabwe Currency
The budget is
in US dollars, and the Minister made it clear that it was the unanimous
Government position that a return to the local currency could not
be seriously considered until there is evidence of a strong economy,
with annual sustainable GDP growth rates of over 6%, high exports
and high foreign exchange reserves, plus a balanced budget and institutional
credibility. Government has, however, started consultations on an
optimum currency regime, which will be followed by democratic debate
and public discussions commencing next year.
said he had anchored the budget on the Three Year Macro-Economic
Policy and Budget Framework: 2010-2012 [STERP II] which the inclusive
government had come up with as the successor to the Short
Term Emergency Recovery Programme [STERP].
Income and Expenditure
total budget for 2010 is estimated at $2.25 billion, made up of
projected amounts from:
[taxes, fees, rents etc.] of $1.44 billion [64%]
aid grants of $810 million [36%]
departments and parastatals had submitted estimates for expenditure
totalling $12 billion; but these have had to be cut down to fit
the $2.25 billion that will be available to spend. [The Revised
Estimates for 2009 authorised total expenditure of $1.39 billion.]
expenditure will account for $1.678 billion [117% of projected
revenue and 75% of the total budget]. [Note: Employment costs
will account for over 60% of projected revenue and 33% of the
expenditure will account for $571.8 million [40% of projected
revenue and 25% of the total budget]
the International Aid Grants Will be Used
The $810 million
in international aid grants will be accounted for in the Budget
Vote of Credit controlled by the Ministry of Finance and will be
used for specific programmes and projects prioritised by Government
and allocated as follows: Health 26%; Social Protection 15%; Agriculture
12%; Water and Sanitation 11%; Transport and Communications 7%;
Energy and Power 7%; Education 5%; Other 17%. [Note: Under “Other”
the Ministry of Constitutional and Parliamentary Affairs is allocated
$43.7 million for the constitution-making process, and $28.7 million
for “governance and human rights”.]
to Ministries and Departments
There are 36
Ministries in all – a few are listed below and each allocation
is shown as a percentage of the total budget:
- Health and
Child Welfare: $358 081 186 [16%]
of Education, Sport, Arts and Culture: $312 720 700 [14%]
- Higher and
Tertiary Education: $70 264 000 [3%]
- Labour and
Social Services: $147 000 896 [6.5 %]
Housing: 5 786 000 [0.25%]
of Defence [including Army and Air Force]: $98 293 00 [4.3 %]
of Home Affairs [including Police]: $103 613 000 [4.6 %]
- Office of
the President and Cabinet: $50 568 000 [2%]
- Office of
the Prime Minister: $6 078 000 [0.27%]
to Service Delivery Ministries [e.g. the first four in the above
list] are made up of funds derived from revenue and from international
aid grants [see above]. The revenue funds will be allocated directly
to the Ministry, but the funds from international aid grants are
controlled by Treasury through the Vote of Credit.
of seeds and fertilisers: $84.5 million
of text books for primary schools: $28.15 million
Land Audit: $31 million
process: $43 million
- Human Rights
and Governance: $28.7 million
of drugs and medical supplies, medical equipment and health infrastructure
rehabilitation: $285.4 million.
- Social protection
programmes [including $25 million for the BEAM scheme for supporting
school students, support for the elderly, chronically ill and
other vulnerable groups]: $119 million
- Crop input
packs for vulnerable rural households: $98 million
- Water and
Sanitation Programme: $109 million
of roads, bridges, railways, airports: $58.5 million
- Energy and
power development: $57.6 million
All these allocations
will come from international aid grants administered through the
Treasury Vote of Credit.
Constituency Development Fund
of Constitutional and Parliamentary Affairs will administer a new
Constituency Development Fund of $8 million, to be divided equally
among the country’s 214 House of Assembly constituencies [approximately
$38 000 per constituency]. The money will be used for construction
of boreholes, repair of schools and clinics, purchase of generators,
etc., in accordance with an annual development plan drawn up by
a committee of elected councillors chaired by the local MP. There
will be strict accountability, with the Ministry paying suppliers
and service providers direct.
on education, health and social services and social safely nets
will help the majority of women in the country who are the poorest
of the poor. Help given to vulnerable rural households and communal
land farmers will benefit women. Rural communities will be capacitated
through training and provision of start-up capital for income-generating
projects. $23 million will go to supporting micro, small and medium
enterprises and co-operatives, youth projects, mining loans for
small miners and rural electrification. Under each scheme 60% of
funds for on-lending will be earmarked for women, as lobbied for
changes to be effective 1st January 2010]
tax will be reduced from 30% to 25%.
- For individuals
the tax free threshold will be increased from $150 to $160 and
the highest tax rate will be reduced from 37.5% to 35%.
thresholds for annual bonuses and retrenchment packages will be
increased to $400 [effective 1st November 2009] and $15 000, respectively.
- Excise duty
on spirits will be doubled, from 20% to 40%.
- Customs duty
on half-tonne trucks and motor vehicles of engine capacity below
1500 cc, will be reduced from 40% to 25%.
tax [$300 per quarter] will be imposed on restaurants, bottle
stores and cottage industries not already covered by informal
sector presumptive taxes.
tax on commuter omnibus operators will be reduced slightly.
- Rates of
interest on unpaid taxes will be aligned with rates being charged
by banks to borrowers [this means an increase].
- VAT will
be rationalised, resulting in some presently exempt or zero-rated
commodities becoming subject to VAT.
Fees and Royalties
the use it or lose it principle, unworked claims will attract a
fee to discourage the holding of claims for speculative purposes.
precious metals will be increased from 3% to 3.5%
will have to reserve 10% of production for the local cutting and
Ahead – in the Longer Term
Tax Act being prepared
of experts from the Ministry, ZIMRA and the private sector has been
working on the preparation of a new Income Tax in simplified language
easily comprehensible by tax-payers. This will replace the present
Act, which is more than forty years old and has lagged behind modern
trends in tax law and international best practices. Aspects being
studied include: changing the basis for income tax from source of
income to residence [meaning that all income accruing to a resident
of a country is subject to tax in that country, regardless of income
source]; a flatter tax regime; and provisions to incorporate standard
transfer pricing guidelines based on international best practice.
Defined Benefit Pension Scheme will be replaced by a Defined Contribution
Pension Scheme which will entail the establishment of a Civil Service
Pension Fund in 2011. Changes to present legislation will be needed.
the Budget Package Through Parliament
have been conducting Post-Budget Analysis meetings since Thursday
3rd December. These meetings will continue on Monday 7th December.
Tuesday 8th December the House of Assembly will:
- debate the
Minister’s Budget presentation, and if it is approved, the
Minister will table a Finance Bill to give effect to his taxation
the Estimates of Expenditure. This is done in a special committee
of the whole House called the Committee of Supply. If the Estimates
are approved, the Minister will then introduced the Appropriation
(2009) Bill which will authorise expenditure in accordance with
the approved Estimates.
the Bills will be transmitted to the Senate for consideration. As
both are “Money Bills”, the Senate cannot amend them,
but may recommend amendments to be made by the House of Assembly.
If amendments are recommended, the House must consider them but
is not obliged to accept them, and the Bill may be presented to
the President for assent in the form passed by the House, with the
amendments, if any, made by the House on the Senate’s recommendation.
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