GOVERNMENT is planning to introduce a tax rebate for companies that create additional jobs as part of broader fiscal policy measures aimed at stimulating the economy towards an upper middle-class status by 2030.
Finance and Economic Development Minister Professor Mthuli Ncube revealed this in Bulawayo on Thursday while addressing parliamentarians and Cabinet ministers during the on-going 2019 pre-budget consultative conference.
He said job creation was at the heart of President Mnangagwa’s transformation agenda, as espoused in the Transitional Stabilisation Programme (TSP), which recognises the critical role of the private sector in the economy and the need to incentivise them.
“I would like to link the fiscal regime to job creation,” said Prof Ncube. “Other countries have done it. This is what they have done, they look at apprenticeships, they look at jobs for the youthful employees who have just come out from universities and then they give tax rebates to those companies that create additional jobs in terms of apprenticeships.
“We could easily set a number and say, look we are going to set a rebate of $400 for a maximum of five jobs that any company creates. But it must be additional jobs, not to just fire others and then replace them.
“So, I can prove that there are additional (jobs) and this rebate is going to be after 12 months when the person has spent 12 months with you as a way to stimulate job creation.
“Let’s reward companies for creating jobs, especially jobs for the youth. So, I am going to push this idea further.”
Due to structural changes in the economy over the years, Zimbabwe has suffered a reduction in formal employment, which has given rise to the thriving informal sector.
This has also impacted negatively on tax revenue inflows.
Prof Ncube said Government was aware of the challenges facing the economy and was putting all necessary interventions to alleviate the plight of ordinary citizens, including expanding the job market.
While efforts are being made to unlock opportunities in key sectors such as agriculture, manufacturing and services, Prof Ncube said great potential lied in the small to medium enterprise sector.
He pledged Government’s commitment to support budding businesses that have proved to have a huge impact on the economy.
“One of the best propositions I have made around the budget, around the vision for Zimbabwe is about SMEs and the more we can do to support the SMEs, the better,” said Prof Ncube.
“There is one issue about SMEs, it is access to capital. The collateral requirements are just too onerous for the sector and dealing with the collateral requirement is key, but also innovating around that.
“Maybe we should start accepting insurances on loans as good enough collateral. It doesn’t have to be a stand, a house or anything. We should begin to accept that. Other countries are accepting it already, so we have to innovate.”
Prof Ncube stressed the need to scale up infrastructure development through a vibrant Public Private Partnerships framework.
Using this model, he said, Government would speed up rehabilitation of major roads and hinted that the in next three years, the Harare-Chirundu-Beitbridge Highway upgrade project should be completed.