FINANCE minister Mthuli Ncube yesterday dampened the hopes for a merry Christmas for the majority Zimbabweans after he reviewed the tax-free threshold to $10 000, about half the cost of a monthly basket for an average family of five estimated at $20 000 and made it effective January 1 2021. BY TATIRA ZWINOIRA The tax-free threshold was doubled from $5 000 announced in the 2020 Mid-Term Budget and Economic Review last July. Expectations were high that the national budget presented yesterday would give consumers relief after a difficult year, through the review of the tax-free tax bands in line with the poverty line. The $10 000 tax-free bracket means that the majority of Zimbabweans will have a difficulty 2021 because their earnings will not be enough to buy basic commodities, let alone clothing. To make matters worse, the new thresholds will only apply in January instead of November as has been the tradition. Families also budget their year-end salaries to cater for the following year, such as school fees, which have rocketed in the past few months, as schools tried to cushion themselves against rampaging inflation and price hikes. “Government remains committed to improving workers’ disposable income as part of the broader agenda to increase aggregate demand and savings,” Ncube said. “The recent salary and wage adjustments for public and some private sector employees necessitate a corresponding review in the personal income tax framework,” Ncube said. “I, therefore, propose to review the tax-free threshold from $5 000 to $10 000 per month. I further propose to adjust the tax bands to begin at $10 001 and end at $250 000 per month, above which the highest marginal tax rate of 40% will apply. The above measures are effective from January 1 2021. “In addition, I propose to review upwards, the bonus tax-free threshold from $5 000 to $25 000, with effect from November 1 2020.” However, many companies are in distress and very few will afford to pay bonuses. The review of the tax-free threshold comes as the annual inflation rate still remains high at 471% in September which was, however, down from 761% in August and 836% in July. The cost of living for a family of five has risen to over $20 000 and $4 000 per person as at the end of last month from $15 570 in July, according to official statistics. The recent 40% rise in government wages, referred to by Ncube would see the least paid civil servant earning $14 528 while the basic pay for a teacher would be $18 237 a month. As the Zimdollar has continued to depreciate, individuals and families have to prioritise expenditure which has led to a fall in consumer spending and thus lowering economic activity. Treasury has also increased the tax-free threshold for the intermediated money transfer tax (IMTT). “I, therefore, propose to review the tax-free threshold from the current $300 to $500 and the maximum tax payable per transaction by corporates from the current $25 000 to $800 000 on transactions with values exceeding $40 million, with effect from January 1 2021. For transacti