Zimbabwe’s VAT Reforms: Boosting Revenue, But at What Cost to Poverty?

• Zimbabwe’s 2024 VAT reforms aim to increase revenue by 0.88% of GDP.
• The reforms involve reducing exemptions on essential goods.
• The reforms are projected to increase poverty by 1.4 percentage points.
• The reforms are expected to increase inequality.
• The study recommends targeted cash transfers to protect low-income households.
• Zimbabwe’s VAT system has a total tax gap of 5.4% of GDP.
• The study warns that reducing exemptions will increase financial pressure on lower-income households.
• Zimbabwe’s economy has a high level of informality.
• The poorest households source 83% of their consumption from informal markets.

Source: devdiscourse.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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