Government has widened the tax-free income threshold from $30 million to $300 million per month with effect from this month, a move tailored to increase workers' disposable income.
The maximum percentage tax band that is currently at 47,5 percent has been moved to 60 percent for those earning $20 billion or more with effect from this month. This was announced in an Extraordinary Government Gazette published yesterday.
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The Government has also imposed higher tax bands to those earning a cumulative gross salary of between $45 billion and $90 billion for the next nine months and would be taxed at 50 percent. This means with effect from this month, a person earning between $5 billion and $10 billion per month would be taxed at 50 percent. The monthly slice income tax rates under $300 million is zero but from $300 million to $800 million an employee would be taxed at 25 percent with effect from this month.
The monthly slice of income tax between $800 million and $1,3 billion would be 30 percent while the slice of those earning between $1,8 billion and $2,3 billion would be 40 percent. Those earning between $2,3 billion and $2,8 billion would be taxed at 45 percent while those earning between $2,8 billion and $5 billion would be taxed at 47,5 percent. Those earning between $5 billion and $10 billion would now be taxed at 50 percent while those earning between $10 billion and $15 billion would be taxed at 52,5 percent. The tax threshold was last reviewed in Cde Samuel Mumbengegwi's National Budget statement for 2008 and came into effect on January 1.
The widening of the income tax threshold is expected to cushion workers against the effects of the runaway inflation.
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