The 2025 National Budget has ignited spirited reactions across the political spectrum. Both ZANU-PF supporters and the opposition—the usual loud and gullible critics—are united in their discontent. Oddly enough, this shared disapproval may be the clearest indication that Finance Minister Mthuli Ncube is doing an exceptional job.
By Brighton Musonza
A Finance Minister who enjoys popularity is often a crowd-pleasing consumerist, one who prioritises short-term gains at the expense of fiscal discipline. In contrast, Ncube’s budget reflects a bold attempt to balance revenue generation with structural adjustments designed to correct societal behaviours.
Unfortunately, instead of critically analysing the intricacies of the budget, public discourse has been dominated by peripheral issues: power blackouts and the controversy surrounding a luxury Range Rover. The lack of substantive engagement with the budget is disappointing, as it represents a missed opportunity to dissect policies that could redefine Zimbabwe’s socio-economic landscape.
Ncube’s pragmatic approach has earned him enemies not only within ZANU-PF but also among pro-regime figures who propagate radical socialist rhetoric. These critics fail to acknowledge that the Finance Minister is not the source of corruption or inefficiency in governance. Rather, he is a technocrat navigating a maze of entrenched interests and structural challenges. Despite the odds, Ncube is striving to implement policies aimed at creating a sustainable fiscal framework.
Here is a closer look at some of the budget measures and their implications:
Indirect Consumer Taxes: Shaping Behaviour, Not Punishing Consumers
A noteworthy aspect of this budget is its emphasis on indirect taxes designed to influence societal behaviour while generating revenue. These taxes, by design, are avoidable—encouraging responsible choices rather than imposing punitive financial burdens.
Fast Foods Tax
From January 1, 2025, a 0.5% tax on the sales value of fast foods like pizza, burgers, and French fries will take effect. This measure aims to promote healthier eating habits and revive family-oriented dining traditions. By choosing nutritious home-cooked meals over greasy takeaways, consumers can not only avoid the tax but also reduce the strain on the healthcare system. It is a forward-thinking policy aligned with global trends where sandwiches and lighter lunches are preferred over calorie-laden fast food.
The introduction of the 0.5% Fast Foods Tax, effective January 1, 2025, is part of a broader effort to promote healthier eating habits and encourage family-oriented dining in Zimbabwe. As urban centres like Harare face growing challenges—such as poor access to water and electricity, long power outages, and a rise in late-night vending—this tax could have unintended effects. While the intention behind the tax is to reduce reliance on fast food, which is often unhealthy and contributes to rising healthcare costs, the reality for many urban dwellers is a struggle for basic utilities and services. The lack of reliable water and electricity, combined with the prevalence of informal street vending, has pushed many residents into consuming fast food out of convenience, especially during late hours when cooking at home becomes difficult due to power cuts or water shortages.
In Harare, where water supply issues and frequent power outages make it hard for households to prepare meals, the tax may inadvertently place further pressure on already stretched families. The informal vending sector, operating in the absence of regulatory frameworks, has become a lifeline for many, particularly in the evenings when other options are scarce. While the Fast Foods Tax seeks to address health issues and promote family meals, it overlooks the reality that many consumers in Harare are forced into unhealthy eating habits because of the city’s infrastructural challenges. Rather than discouraging the consumption of fast food, the policy may need to be coupled with improvements in basic services—such as consistent water supply and electricity—to truly enable healthier and more sustainable eating habits in urban communities.
Betting Tax
Betting, often addictive and detrimental to family stability, will attract a 10% withholding tax on gross winnings starting in 2025. While this policy might frustrate sports betting enthusiasts, it serves a higher purpose: discouraging over-reliance on gambling as a source of income. By curbing addictive behaviour, the government hopes to foster a culture of productivity and responsibility.
Plastic Carrier Bag Tax
The 20% tax on the sale value of plastic carrier bags is perhaps the most progressive of all. It is aimed at promoting biodegradable alternatives and reducing plastic waste, which constitutes a staggering 90% of non-biodegradable waste. By encouraging reuse and sustainable practices, this measure aligns with global environmental goals and addresses the pressing issue of plastic pollution.
Targeted Taxes: Enhancing Revenue and Regulation
The budget also includes targeted taxes that seek to formalise sectors, regulate activities, and optimise resource use.
Rental Income Tax
Properties converted from residential to commercial use will now attract a 25% tax. This measure seeks to discourage businesses from encroaching on residential areas, preserving the integrity of neighbourhoods while ensuring that such properties contribute fairly to the tax system.
The introduction of a 25% Rental Income Tax on properties converted from residential to commercial use aims to address the growing trend of businesses encroaching on residential areas, particularly in Harare, where this practice has become increasingly common. This tax is designed to preserve the integrity and character of residential neighbourhoods, which are often disrupted by the higher traffic, noise, and infrastructure strain associated with commercial activities.
By imposing this tax, the government seeks to create a fair system where such properties contribute appropriately to the tax base, reflecting their commercial benefits. Additionally, this measure promotes better urban planning and zoning compliance, ensuring that residential areas remain primarily for housing while commercial activities are directed to designated zones. This approach balances the need for economic activity with the preservation of community environments.
Mandatory Tax Registration for Emerging Sectors
Certain businesses, including car dealers and hardware operators, are now required to register for taxes. Failure to comply will result in mandatory quarterly corporate tax payments. This policy is a deliberate attempt to bring informal and emerging sectors into the formal economy, expanding the tax base and fostering compliance.
The introduction of Mandatory Tax Registration for Emerging Sectors, such as car dealers and hardware operators, aims to formalise these often informal industries, broadening the tax base, ensuring fair compliance, and reducing reliance on existing taxpayers. By mandating registration, the policy combats informality enhances transparency, and incentivises voluntary compliance, avoiding penalties like quarterly tax payments. It also allows the government to monitor economic activities, preventing revenue leakages and capturing untapped tax potential. Furthermore, formalisation can foster sector growth, improve access to financial services, and encourage sustainable regulation, ultimately contributing to equitable development and enhanced revenue collection.
Royalties on Quarry Stones
Quarry stones will attract a 0.5% royalty on their sales value, ensuring that natural resources contribute to national revenue while balancing environmental and social considerations. This measure underscores the government’s intent to extract value from finite resources responsibly.
The introduction of a 0.5% royalty rate on the sales value of quarry stones is designed to generate government revenue by ensuring that natural resource extraction contributes to the national budget. By tying the royalty to sales value, it creates a proportional and scalable revenue stream, encouraging efficient resource use while discouraging waste. Additionally, the policy aims to formalise the quarrying sector by mandating compliance and transparency, fostering a regulated and fair business environment where all operators are subject to the same rules.
Beyond economic benefits, the royalty seeks to address the environmental and social impacts of quarrying by providing funds for remediation and community development initiatives. It also promotes local development by reinvesting the revenue in infrastructure and services, benefiting areas affected by quarrying activities. This balanced approach ensures sustainable resource use, equitable development, and a fair contribution from the sector to national progress.
Promoting Sustainability and Innovation
The budget includes several measures designed to support sustainable development and encourage innovation across sectors:
Customs Duty on Electric Vehicles
The reduction of customs duty on electric vehicles from 40% to 25% is a significant step towards promoting eco-friendly transportation. By making electric vehicles more affordable, this policy encourages the adoption of greener technologies, contributing to reduced carbon emissions and environmental sustainability.
Special Surtax on Cordials
The halving of the surtax on cordials, from USD 0.001 to USD 0.0005 per gram of sugar content, strikes a balance between promoting healthier consumption and supporting the beverage industry. It subtly incentivises lower sugar content in beverages, aligning with global health trends.
VAT on Liquefied Petroleum Gas (LPG)
The exemption of LPG from VAT is a move to make this cleaner energy source more accessible to households and businesses. It aligns with efforts to promote sustainable energy use while reducing reliance on less eco-friendly alternatives.
Economic Adjustments for Growth and Efficiency
Corporate Income Tax on Building Societies
Receipts from non-mortgage activities by building societies will now be taxed, ensuring equitable contributions to national revenue and discouraging the use of loopholes within the financial sector.
Degree of Export Orientation for SEZs
The reduction of the export requirement for Special Economic Zones (SEZs) from 100% to 80% reflects a more realistic approach to incentivising investment while maintaining economic balance. Additionally, replacing tax holidays with a 15% corporate income tax rate ensures steady revenue generation from these zones.
Changes to VAT Payment Deadlines
Reducing the VAT remittance deadline from 25 days to 15 days improves revenue collection efficiency, ensuring timely inflow of funds to the government while compelling businesses to enhance compliance.
Reduced Interest Rate for Local Currency Revenue Remittances
The adjustment of interest rates for local currency revenue remittances to the Bank Policy Rate plus 5% provides relief for businesses while maintaining an incentive for prompt tax payments.
Conclusion: A Necessary Discomfort
Mthuli Ncube’s 2025 budget is not designed to win popularity contests—it is a pragmatic roadmap for addressing Zimbabwe’s fiscal challenges. While critics from across the political divide voice their dissatisfaction, they fail to see the bigger picture: these measures are rooted in long-term sustainability, societal responsibility, and economic growth.
Yes, these policies may pinch in the short term, but they reflect a deliberate shift towards fiscal discipline, environmental responsibility, and behavioural reform. Ncube is not the architect of Zimbabwe’s systemic corruption; he is a technocrat doing the best he can in an imperfect system. Instead of focusing on distractions like power outages or luxury cars, stakeholders must engage meaningfully with the policies that will shape the nation’s future.