The Jesuit Centre for Theological Reflection says workers have very little to smile about in 2018 because of the increased cost of living and minimal salary increment.
And JCTR says it is unjustifiable to allocate 10 per cent of the budget to enhancing security when the country is not at war.
In a statement today, JCTR media and information officer Tendai Posiana, said government should have given workers some tax relief in the 2018 budget.
“Of major concern also is the silence of the 2018 budget on the needs of workers who bear the heavier burden of financing budgets through pay as you earn. The tax free threshold has remained stuck at K3,300 while the highest tax band has remained at 37.5% and as if this were not enough, the allowable pension contribution of K255 will now be subjected to tax. This is indeed at variance with the budgets spirit of not leaving any one behind. In the light of increased cost of living and minimal salary increment; workers have little to smile about in 2018 but to continue tightening their belts. Government should have given workers some tax relief by reducing allocations to defence and public order and safety,” Posiana stated.
“Poverty and vulnerability reduction pillar has also received fair attention from the 2018 budget. Under the Social Protection Programmes, measures that include implementation of the social cash transfer scheme and food security pack are being proposed. However, of concern to the JCTR is lack of coordination in the implementation of social protection programmes. The issue of wrong targeting where people who are not in real need are given social cash transfer should also be addressed. Social cash transfer should be targeted at the very poor echelon of our society.”
And Posiana stated that the money allocated to enhancing security would have been better utilized.
“Zambia is one of the most secure and orderly countries to warrant such continued high allocations. This is not to trivialize the work of maintaining safety and security of the country but a country that is not at war cannot justify allocating almost 10% of the budget to defence and safety and security combined,” she stated.
Posiana stated that government’s intention to increase domestic borrowing would disadvantage the private sector through increased lending rates.
“Government’s chances of realizing its lofty intentions can only be assessed through its measures to raise revenues and pillar five of creating conducive governance environment for a diversified and inclusive economy speaks to that. The share of the budget to be financed from domestic resources of 68.5% still falls below the level of 70% reached during the previous MMD government and it seems the country continues to rely heavily on debt financing. While the projected external financing in the 2018 budget has fallen by almost 50% compared to 2017 budget, JCTR is alarmed at the proposed increased domestic borrowing of almost three times the 2017 level. A budget that is premised on job creation through the private sector cannot afford to borrow this much as this will crowd out the private sector who is supposed to invest and create jobs,” she stated.
“Government increased domestic borrowing is also likely to push up lending interest rates by banks which will increase cost of doing business and ultimately counter the well-intended target of job creation. The JCTR also notes that continued increase in the allocation to loan repayments; both external as well as domestic is indicative of how serious the issue of debt is to the country.”
Posiana urged Finance Minister Felix Mutati to quickly table the Loans and Guarantees Act before Parliament.
“The Centre therefore demands that Government urgently shares its Medium term Debt Management Strategy which the Minister of Finance announced that it was adequate to deal with the issue of public debt with citizens to acquaint themselves with it in order to hold government accountable. JCTR further urges Government to quickly table the loans and guarantees act before Parliament for amendments to allow Parliament have oversight on the country’s borrowing in line with the provision of the amended constitution as announced by the Minister of Finance. This exercise is long overdue,” Posiana stated.
“At the rate we are accumulating debt, this exercise is too important to be left to the whims of the Executive who has demonstrated unbridled appetite for borrowing. Above all, JCTR urges government to invest borrowed resources in projects with high economic returns such as roads that open up rural areas and connects them to markets. The introduced excise duty of K2 on cement also seems contradictory to the budget’s desire of creating jobs and leaving no one behind. The construction sector is one of the sectors that has been growing fast and contributing to the economy. The introduced duty will unnecessarily increase the cost of construction especially to ordinary people who are building houses.”
She stated that the proposed revenue measures fell short of government’s intentions of reducing poverty and inequality.
“Overall, the proposed revenue measures seem to fall short of the high intentions of reducing poverty, inequality and creating jobs so that no one is left behind. While JCTR acknowledges measures such as removal of tax holiday of five years offered to foreign firms, the total financing measures proposed are inadequate to deliver the good intentions of the 2018 budget. The budget is almost silent on effectively taxing mining companies. The informal sector is another sector that has been almost let scot free. The challenges facing collection of informal sector taxes go beyond the upward adjustment of informal sector tax such as base tax which the minister announced but administration of the informal sector taxes. The budget should have also provided more incentives for local industrialization. Other than creation of industrial economic zones and parks, the budget has not offered much on how it will industrialize the economy and create jobs. The budget also has no relief to workers as they continue to bear the burden of generating tax revenues,” stated Posiana.
“Of the total education allocation of K11.56 billion for instance; only K1.8 billion will go to primary and secondary school infrastructure, student loans and scholarships, university and college infrastructure as well as skills development. The pattern is the same in health. Despite the total allocation of K6.78 billion to the health sector, only K1.5 billion has been allocated to health infrastructure development, drugs and medical equipment acquisition. It seems the larger share of the allocation is to administrative expenses which have remote benefit to the patients.”