ALLOW me to express my opinion on the 2018 National Budget that was presented to Parliament by the honorable Finance Minister Felix Mutati.
The year 2017 has been a moderately good year for business and ending with signs of turnaround which can be used to once again reset the economy on a trajectory of good growth. However, critical decisions must be made and actions implemented promptly to steer the country on a path of sustainable development and inclusive economic growth.
The 2018 budget is premised on five pillars which are; economic diversification and job creation, reducing poverty and vulnerability, reduce development inequalities, enhancing human development and creating conducive governance environment and inclusive economy.
However, there were few significant tax measures pronounced and the measures proposed were primarily comprised of strengthening regulations and systems aimed at increasing revenue generations. The objective of Honorable Mutati‘s budget is to limit fiscal deficit and increase tax revenues.
In my opinion, the 2018 budget has winners and losers. The winners are the mining companies with absolutely no changes to the tax regime and they will continue enjoying favourable tax conditions as compared to other countries in the region, famers: with e-voucher system to be fully implemented with a target of over one million farmers, contractors: expecting the Link Zambia projects to continue, the corporations and the manufacturing sector just to mention a few.
The losers were the Zambian workers; the budget lacked even an inflammatory increase in the tax except thresholds and tax bands for pay as you earn (PAYE). The continued reliance on increasing revenue generation from PAYE collected from a relatively small proportion of the formal sector working population will have negative repercussions in terms of talent retention and employment prospects. This is unsustainable in the longer term and Government needs to shift this comparatively high burden of taxation away from PAYE because this reduces the real income in the hands of the worker and this will definitely increase the tax burden on low to medium income earners considering that the tax bands have not been increased.
The measures announced to attain fiscal fitness, better social protection, a simpler and fairer way to expand the tax system must be commended.
If implemented effectively and promptly, these measures should provide a strong platform for enhancing the economic and social trajectory for this nation. The measures, which include revisions to the Public Finance Act (more punitive actions against abuse of and misapplication of funds), the Public Procurement Act (to improve prices and project appraisal prior to granting of tender approval), and the Planning and Budgeting Bill (legal framework for managing public resources), and Tax the informal sector.
All these measures will help to expand the tax base; increase compliance and most importantly assist in the reformation of the public sector and this will help in tackling the difficult problems in building a better Zambia.
If the right decisions are made and implemented and adhered to; 2018 could be a year of real progress and steer the country on a path of sustainable development and inclusive economic growth.
God bless this great country Zambia and its leadership.
Economist/Chartered Accountant Lusaka