Abstract
The Employer Tax Incentive (ETI) was established as an employer-sided wage subsidy intended to boost the demand for young workers. Considering the high supply of youth labour in South Africa, it was believed that a wage subsidy from the employer's side could effectively increase demand for young employees. The ETI legislation was implemented in South Africa during 2014 with the main aim of reducing youth unemployment. Similarly, Zimbabwe also introduced the Youth Employment Tax Credit (YETC) from January 2020 as an initiative to try alleviate youth unemployment. The YETC is also an employer-sided wage subsidy similar to the ETI.
This study begins from the premise that there is limited research that has been conducted to identify the possible pitfalls of the YETC legislation. Consequently, the purpose of this study was to determine whether the pitfalls of the ETI legislation may be possible pitfalls for the YETC legislation given that these two pieces of legislation are comparable. This study adopted a qualitative approach in the form of a literature review. The research approach involved the collation and evaluation of the existing body of knowledge mainly focused on the ETI and its pitfalls. Different sources of research previously conducted on the pitfalls of the ETI legislation were collected and analysed against the YETC legislation.
The findings have shown that there are certain pitfalls that are likely to be possible pitfalls for the YETC legislation. This study further recommends that the Zimbabwe tax authorities assess the possibility of the YETC legislation being impacted by these pitfalls and how the legislation could possibly be amended. This recommendation is a suggestion for the Zimbabwean tax authorities; however, it also highlights the need for more research to be conducted on the Zimbabwean YETC legislation to identify the actual pitfalls.