Zimbabwe mulls wealth tax, lithium levy to boost revenue
Zimbabwe has introduced a new tax on lithium and a wealth tax to support a substantial 14-fold surge in expenditures aimed at stabilizing the economy. According to the annual budget presented by Finance Minister Mthuli Ncube, projected spending is set to increase to 58.2 trillion Zimbabwe dollars ($10 billion) in 2024, compared to the current Z$4.3 trillion.
The funding for this surge will primarily be sourced from an anticipated more than doubling of tax revenue to Z$51.2 trillion. This increase in spending comes in the wake of an 89% depreciation of Zimbabwe's dollar against the US currency in the current year, coupled with an annual inflation rate exceeding 176% in June.
It's noteworthy that authorities have since revised the method of measuring price growth. As of November, prices have risen by 21.6% year-on-year. Notably, the majority of transactions within the country are conducted in US dollars.
Key Takeaways
Zimbabwe, boasting Africa's largest lithium reserves and other minerals essential for electric vehicle batteries, has consistently focused on its mining sector to enhance revenue. According to data from the Mines Ministry, the country garnered $209 million from lithium exports during the nine months ending in September. The government's proposal stipulates that companies neglecting value-addition processing will be subject to an export tax. The phenomenon of resource nationalism is observed globally, with developing nations aiming to maximize gains from surging commodity prices while addressing historical imbalances in mining-related wealth distribution. In Chile, the second-largest lithium producer, President Gabriel Boric seeks a greater share of the mining windfall to support education and healthcare. Meanwhile, Mexican President Andrés Manuel López Obrador has classified lithium as too strategically significant for private investors.
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