By Steven Mungate
CIVIL servants, struggling to survive in an inflationary environment that has seen their meager wages eroded, will have an early Christmas treat after Finance Minister Mthuli Ncube announced that Treasury will pay them a 100% bonus inclusive of allowances this month.
Presenting his 2020 budget, Ncube said government was aware that the prevailing inflationary environment has eroded incomes for all most workers.
“Wage compression has affected aggregate demand with its negative effect on the GDP. Government is committed to ensuring a decent standard of living for its public
servants, and will take into account inflationary developments in the ongoing Cost of Living Adjustment (COLA) wage negotiations,” said Ncube.
Public workers have declared incapacitation due the high inflation and the erosion of their salaries by inflation.
“Treasury has made arrangements to pay all civil servants their bonuses in November 2019.The bonuses are based on a formula that is inclusive of transport and housing allowances, which is a once off variation to current policy, which base these payments to basic salary only.
“This was designed to bring relief to public servants in light of the erosion of disposable incomes under the current high inflationary environment,” the Treasury boss said.
Ncube also availed addition finance for the establishment of a public service pension as part of the migration from pay-as-you-go scheme to a proper standard pension.
In a bid to stimulate demand, Ncube also proposed a raft of measures to increase disposable incomes.
“I propose to review the tax free threshold from $700 to $2 000 per month and adjust the tax bands to begin at $2 001 and end at $50 000, above which the highest marginal tax rate of 40%, in line with economic developments, with effect from 1 January, 2020. I, further, propose to review the tax free bonus from $1 000 to $5 000, with effect from 1 November, 2019.
“In order to safeguard the value of retrenchment packages, I propose to review the non-taxable portion of the retrenchment package from $10 000 to $50 000 or one-third of the package, to maximum of $80 000. I propose to review the Tax-Free Threshold from the current $20 to $100 and the maximum tax payable per transaction by corporates from the current $15 000 to $25 000 for transactions with values exceeding $1 250 000,” said the Finance Minister.