The government wants to deduct a portion of civil servants’ already insufficient monthly salaries for end-of-year holidays to promote domestic tourism, according to reports. So, the government wants to fund domestic tourism because that money being paid to public sector workers ultimately comes from them.
The idea is being pushed by Tourism and Hospitality minister, Barbara Rwodzi. To the authorities, this is justified given that out of the US$1,16 billion worth of tourism receipts earned last year, only US$428 million came from the domestic market.
The revelation came about a week after it was announced that backdated pension contributions would continue to occur over the next two months on public sector wages. Thus, we ask, why is it always the workers that the government targets for revenues? If you want to know a good example of domestic tourism, one only needs to look at India. India gets more than 50% of its tourism receipts from the local market.
Why? Because the fees and charges for tourism packages are much, much cheaper than what is offered to foreigners. This is not the case in Zimbabwe as even a trip to Victoria Falls, as an example, can cost the same as taking a trip to Johannesburg, South Africa.
So, the government, if it is serious about domestic tourism, cannot be the one funding it. Rather, mandate for lower fees and charges compared to foreigners, from the paltry 1% to 10%, to about 50% to 75% for locals. Tourism players can easily cover the gap through volumes as more people will be taking more trips cross country. Also, backdating salaries at a time when pension payouts after retirement are not only paltry but meagre, below the cost of living, only hurts consumers. If the government paid workers a liveable wage, backdating these contributions would not be a problem. It is important to remember backdating several months of pay off salaries as low as US$300 only squeezes a consumer and not help them.
The challenge in targeting workers for revenues is that it often places an undue burden on those who are already contributing the most to the economy through their labour. While it’s tempting for policymakers to see a vast pool of working individuals as a convenient source of income through taxes, this approach overlooks the precarious financial situations many workers face. With rising costs of living and stagnant wages, the working class is often left stretching every dollar or ZiG, like trying to cover a king-sized bed with a twin sheet! This financial strain not only affects their day-to-day lives but also their ability to save for the future, invest in their education, or plan for retirement. Furthermore, taxing workers heavily can have broader economic repercussions.
When workers are squeezed for every cent, their disposable income decreases, leading to lower consumer spending. This can stifle economic growth as businesses see reduced demand for their products and services. It’s a bit like trying to water a garden with a leaky hose—the intended benefits never quite reach their full potential.
Instead of fostering a robust economy, excessive taxation on workers can create a cycle of reduced spending, slower growth, and ultimately, fewer job opportunities.
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Therefore, policymakers need to adopt a more balanced approach that doesnt disproportionately target workers for revenue generation. This could include progressive tax reforms that ensure higher-income individuals and profitable corporations pay their fair share. Additionally, exploring alternative revenue sources, such as closing tax loopholes and enhancing enforcement against tax evasion, can help alleviate the financial burden on the working class. By creating a more equitable tax system, we can promote sustainable economic growth and ensure that workers are not unfairly penalised for their essential contributions to society. Ultimately, creating or increasing disposable incomes is what will lead
to increased consumer spending and thus more government revenue.
