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Mid-term fiscal policy review: Two bills passed - Bill Watch 29/2010
Veritas
July 18, 2010

The House of Assembly has adjourned until 5th October, the Senate until 12th October

Last Week in Parliament

On Tuesday

• The President opened the Third Session of the Seventh Parliament. [See Bill Watch 28 for highlights of the President’s speech, and details of the legislative agenda he announced for the new Session.]
• The Speaker announced that all Parliamentary committees remain the same, except for a new member for the Parliamentary Legal Committee [PLC] and new chairpersons for three portfolio committees. [See further below.]

On Wednesday

• Minister of Finance Tendai Biti presented his Mid-Term Fiscal Policy Review Statement and also tabled Amended Estimates of Expenditure for 2010.
• Both Houses approved motions suspending various Standing Orders to permit the fast-tracking of the two Bills needed to give effect to the Fiscal Policy Review and Amended Estimates of Expenditure.

On Thursday

• The House of Assembly debated the Fiscal Policy Review, approved the amended Estimates of Expenditure and passed both Bills without amendment.
• Two Bills were passed – the Finance Bill, to give effect to the Minister’s taxation and revenue proposals, and the Appropriation (2010) Amendment Bill, to give effect to the approved Estimates of Expenditure. [See below for highlights of the Fiscal Policy Review Statement.]
• The House then adjourned until Tuesday 5th October, leaving the Senate to deal with the Bills on Friday.

On Friday

• The Senate, which had met for only a few minutes on Wednesday and Thursday, passed both Bills without amendment. [The next step is for these two Bills to be sent to the President for his assent before they can be gazetted and become law as Acts.]
• The Senate then adjourned until Tuesday 12th October.

Amended Estimates of Expenditure for 2010

The Minister stressed that he was not presenting a supplementary Budget or supplementary Estimates of Expenditure, he was merely proposing adjustments and re-alignments in certain Ministry votes, with no change to the original budget of an overall revenue and expenditure [of US$2.25 billion for 2010]. So the estimates he tabled are entitled the Amended Estimates of Expenditure for the Year ending 31st December 2010. Amounts allocated to Ministries in the Amended Estimates have either increased slightly or remained the same. This is because, although there are cuts in expenditure on programmes financed from international aid grants through the Vote of Credit [from US$810 million to $500 million] this is counterbalanced by the improvement in tax revenue collections which is expected to continue.

Highlights of Fiscal Policy Review

[Full text available, but please note that it is a 1.2MB pdf document]

Essentials for economic growth:

• A reiteration that the rule of law, restoration of basic freedoms and democracy are a necessary precondition for sustained economic recovery, making it “imperative” that there be implementation of agreed positions in the GPA around issues of the rule of law, the Constitution, security of persons and prevention of violence, and on freedom of expression and communication.
• Recognition that without title deeds or secure 99-year leases recognised in the Constitution and in Acts of Parliament, land will remain “dead capital” and significant growth in Zimbabwe’s agriculture-dependent economy will remain unrealised.
• Acknowledgment of concerns raised on the “inflexibility” of current labour laws, resulting in unsustainable salary and wage obligations, and necessitating a review of labour laws within the context of the Social Contract.
• Performance in first half year:
• Downward revision of estimated GDP growth for the year from the original 7% to 5.4%
• Improved economic activity has resulted in increased tax revenue collections, with a projected increase for the year of $300 million.
• The “under-performance” of the Vote of Credit, i.e., limited cooperating partner support for mostly infrastructure and social protection programmes in health, education and rural development,. This has resulted in Government’s being unable to undertake some programmes, including Public Sector Investment projects and provision of certain social services in the health and education sectors.
• A projected increase in inflation, with the year-on-year rate having risen to 6.1% in May and the rate for the year revised to 4.5%.

Measures proposed:

• No pay rise for civil servants or MPs, but a slight rise in the income tax tax-free threshold, from US$160 to US$175, will enhance take-home pay.
• Suspension of customs duties on essential commodities will continue to the end of 2010, with the exception of a few commodities now being produced in sufficient quantities by local industry.
• Capital gains tax reduction on unlisted securities.
• Removal of customs duty on items related to solar energy – solar panels, inverters, etc. with effect from 1st August.
• Royalties on precious metals will go up from 3.5% to 4% with effect from 1st October.
• Export tax on chrome ore and fines will increase to 20% with effect from 1st August.
• A “tax amnesty” for some corporate bodies, details to be spelled out later in regulations.

Planned:

• Importation of smaller denomination foreign currency to facilitate the notes and coins, to relieve problems experienced in cash transactions.
• Enhancement of Government revenue from diamond mining, to be achieved by a proposed Diamonds Act and amendments to the Zimbabwe Mining Development Corporation Act.

Changes to Parliamentary Committees

The Prime Minister’s reshuffle of MDC-T Ministers and Deputy Ministers included the appointment of back-benchers to Ministerial and Deputy Ministerial posts. This in turn necessitated changes to membership and chairing of four Parliamentary Committees because Ministers and Deputy Ministers cannot serve on Parliamentary committees. The changes are as follows:

Parliamentary Legal Committee: Hon Innocent Gonese MDC-T is the new member of the PLC, replacing Hon Senator Obert Gutu who is now the Deputy Minister of Justice and Legal Affairs. The PLC will choose its own chairperson.

Public Accounts Committee: Hon. Webber Chinyadza of MDC-T is the new chairperson, replacing Hon Tapiwa Mashakada who is now Minister of Economic Planning and Investment Promotion.

Portfolio Committee on Justice, Legal and Parliamentary Affairs: Hon Douglas Mwonzora of MDC-T is the new chairperson, replacing Hon Tongai Matutu who is now Deputy Minister of Youth, Indigenisation & Empowerment.

Portfolio Committee on Media, Information and Publicity: Hon S. Moyo of MDC-T is the new chairperson, replacing Hon Gift Chimanikire who is now Deputy Minister of Mines and Mining Development.

Update on Legislation

No Bills or statutory instruments were gazetted last week.

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