ZCTU Critique of 2010 Budget

THE General Council of the Zimbabwe Congress of Trade Unions (ZCTU) met at the Quality International Hotel in Harare today 18 December 2009 to review the 2010 National Budget among other issues;

Having deliberated on the submissions by the Minister of Finance, the ZCTU noted that:

In spite of the gains made to date, the economy continues to be confronted by a number of challenges which include the fragility of the Global Political Agreement, the constrained fiscal space, a dual and enclave economy and the various traps identified by the Minister (these include the conflict trap, the resource trap, the debt trap, the leakage trap, the human resources trap, the integration trap, the gender trap; and the savings trap)

The majority of the labour force continues to struggle to earn a living as average incomes continue to lag far behind the Poverty Datum Line (PDL)

Further noting that; .

The increase in the income tax free threshold to $160 remains low relative to the PDL and is therefore insignificant

Corporate tax has been reduced from 30 percent to 25 percent while individual marginal tax rate was only reduced from 37,5 percent to 35 percent. This is unfair considering that companies are in business to make profit, moreover most of their expenses are tax deductible, while individuals earn to make a living and they are taxed first before spending their incomes

The non-taxable portion of the retrenchment package was adjusted from $5 000 to $15 000 which is a welcome development though government should provide support to enable retrenchees to either venture into income generating projects or find alternative sources of livelihood

Contrary to indications by the Minister that the budget is pro-poor, the national budget allocates a disproportionately high percentage of resources to recurrent expenditure (75 percent) as opposed to capital expenditure (25 percent). This is exacerbated by the bloated structure of the inclusive government

The 2010 national budget contains no specific measures to deal with the inherited dual and enclave economic structure

The national budget is largely capitalistic and does not address the concerns of workers

The General Council therefore resolved that;

The income tax free threshold should be set at the PDL.

The individual tax rates should begin at 10 percent and end at a maximum rate of 25 percent

To ensure a pro-poor and inclusive economic growth the national budget should direct resources disproportionately to the sectors in which the poor work (agriculture, construction, and the informal sector); the areas in which the poor live (rural and under developed regions)

The National Employment Policy Framework should be mainstreamed into the national budget, that is, the national budget should have a clear focus on employment creation and poverty reduction

The government should create fiscal space through re-prioritisation and switching of expenditures. This can be achieved by expenditure cutbacks on foreign travel, embassy expenses and the rationalisation of the civil service among others

National action be undertaken in 2010 as the workers position and inputs continue to be ignored by government

Lovemore Matombo

PRESIDENT