Zimbabwe plans wealth tax, new lithium levy to boost revenue

Zimbabwe introduced a new levy on lithium and a wealth tax to fund an almost 14-fold increase in spending aimed at bolstering economic growth that’s expected to slow next year.

An annual budget presented by Finance Minister Mthuli Ncube projects expenditure will rise to 58.2 trillion Zimbabwe dollars ($10 billion) in 2024, from Z$4.3 trillion this year. It will mostly be funded by tax revenue that’s forecast to more than double to Z$51.2 trillion.

To boost income, the southern African nation will impose a 1% levy on the gross proceeds of lithium, black granite and other stones used in construction, Ncube said on Thursday. A 1% wealth tax will target owners of residential properties worth a minimum of $100,000, he said.

“Resources derived from the levy will be ring-fenced toward urban infrastructure development, in particular roads, water, sewers and community health centers,” Ncube told lawmakers in parliament at Mount Hampden, 23 kilometers (14 miles) north of the capital, Harare.

Zimbabwe, which has Africa’s largest lithium reserves and other minerals used in the manufacture of batteries for electric vehicles, has repeatedly targeted its mining industry to boost revenue. The country earned $209 million from lithium exports in the nine months through September, according to Mines Ministry data.

Ncube said lithium miners will be required to submit plans by no later than March 31 for processing the mineral to improve its value — so-called beneficiation.

“No licenses shall be granted to a prospective lithium company without approval of a beneficiation plan,” he said.

Resource nationalism is strengthening across the world as developing countries seek a greater share of profits from higher commodity prices, while addressing historic inequities in the wealth flows from mining. In Chile — the No. 2 lithium producer — President Gabriel Boric is looking for a bigger share of the mining windfall to fund schools and hospitals. Mexican President Andrés Manuel López Obrador declared lithium too strategic for private investors.

Lithium miners in Zimbabwe include Chengxin Lithium Group Co., Sinomine Resource Group Co. and Zhejiang Huayou Cobalt Ltd.

Under the government’s proposal, companies that fail to undertake value-addition processing will be liable to an export tax, according to Ncube. He provided no further details on the threshold of the export tax.

Zimbabwe’s economy is expected to expand 3.5% next year, compared with a revised forecast of 5.5% in 2023, because of a slump in demand for commodities and El Niño-induced weather conditions, which may curb agricultural output, the minister said.