Commenting on the K64.5 billion national budget presented on November 11 by finance minister Felix Mutati, CUTS stated that it was clear that consumers would have to brace themselves for tough times ahead.
“Firstly, regarding incomes, we were glad to note that the budget indicated that there would be an increase in the exempt threshold for Pay As You Earn (PAYE) from K3,000 to K3,300 per month and as such, all other income bands would need to be adjusted accordingly. However, to mitigate the revenue loss, there will be an increase in the top marginal tax rate from 35 per cent to 37.5 per cent,” read the CUTS press statement.
“According to the minister, pricing of fuel and electricity has not been cost-reflective leading to unsustainable fiscal outlays and a lack of investment in the sector. As a result, the government will by the end of 2017 move to cost-reflective tariffs to attract private sector investment while maintaining the lifeline tariff to protect poorer households. There might be an increase in poverty statistics due to austerity measures in the recently announced national budget as some households are unable to cope.”
CUTS stated that although Mutati outlined areas of expansion, the number of people living in poverty would remain high.
“While there are other programmes that will be introduced and/or expanded, the figures of the targeted beneficiaries still remain marginal in comparison to the number of people living in poverty in Zambia. Overall, it is clear that consumers can expect some difficult times ahead. As CUTS, it is our hope that firstly, the social protection programme that will be implemented over the course of 2017 is done so effectively to ensure that it reaches the intended beneficiaries. Secondly, while the minister made it clear that as a country we will have to tighten our belts, it is important to ensure that this applies not only to ordinary citizens; the burden must be borne equitably by all!” stated CUTS.
CUTS also stated that import taxes would have a negative impact on consumers.
“The government has implemented these measures to assist local products compete with imported goods by raising the cost of imported agricultural products; however, although it may prove to be beneficial to producers, it is consumers who will have to bear the brunt of this price increase,” stated CUTS.
“If the government is to go ahead with this introduction of import taxes, it is important that the government puts in place a limited time frame for these taxes so as to encourage producers to become more efficient overtime and subsequently ease the burden on consumers. An open-ended imposition of import taxes will result in inefficient producers who will ultimately negatively impact consumers.