TRANSPARENCY International Zambia (TI-Z) has stressed the need for the 2022 budget to be consistent with UPND campaign promises.

And Policy Monitoring and Research Centre (PMRC) executive director Bernadette Deka Zulu says there is need for government to broaden its tax base in the 2022 budget.

In a statement, TI-Z executive director Maurice Nyambe said the 2022 budget would be a litmus test on whether or not the UPND government would deliver on their campaign promises.

“The 2022 national budget will be presented to the National Assembly on Friday 29th October 2021. This Budget is an initial benchmark for the UPND administration and is, therefore, expected to reveal government’s key priorities for the year 2022. The UPND won the 2021 general elections on the promise of higher economic growth and prosperity, job creation, prudent management of public resources and good governance, among others,” he said.

“The 2022 budget will therefore be the first litmus test for the UPND government as to whether or not they are determined to deliver on their campaign promises. Transparency International Zambia (TI-Z) therefore calls upon all Zambians to scrutinize the 2022 budget in search of indicators of prudent debt management, greater commitment to economic recovery and development, higher allocations towards the social sectors and good governance through promoting transparency, accountability and integrity in the management of public resources.”

Nyambe stated that the budget should elaborate on how government would implement measures aimed at reducing corruption in the budget cycle.

“The Zambian people are aware that the UPND administration has committed to deliver change in the way public resources are managed. The budget is therefore a critical tool for generating change through implementing measures aimed at reducing corruption in the budget cycle. In the 2021 budget, government committed to introducing public procurement reforms in order to give priority to citizens to participate in the supply of goods and services, introduce price benchmarking, penalize fronting and selling of contracts, improve contract management, make it mandatory to use the Electronic Procurement System and penalize offenders. TI-Z therefore expects the 2022 budget to reflect the progress made in implementing these reforms and develop new measures to curb corruption in the procurement system,” he stated.

Nyambe said the 2022 budget should also address the debt burden which had continued to crowd out the social sector.

“The 2022 budget should also address the debt burden which has continued to crowd-out the social sectors through demanding a greater share of the budget for debt servicing. The reduced budget shares of the social sectors over the past few years has worsened the poverty situation for most households. There is need to allocate more resources towards education, health and social protection in order to reduce the vulnerabilities which trigger petty corruption as citizens are forced to compete for inadequate social services,” said Nyambe.

“TI-Z also calls upon the UPND government to urgently publish and widely circulate the 2022 citizens’ budget. A citizens’ budget allows for easy understanding of the content of the budget and for a wider section of the general public to participate in the budgeting process.”

Meanwhile, Zulu called for a reduction on individual taxes in order to alleviate pressure at individual and corporate levels.

“As government seeks to mobilize for domestic revenue sources, broadening the tax base ought to be considered. Therefore, tax policy will need to be reviewed. We expect a reduction on individual taxes in order to alleviate pressure at individual and corporate level. Government is also expected to take advantage of the current favourable copper prices and seize the opportunity to reintroduce some taxes regarding windfalls. In addition, government is urged to implement tax reforms in a win-win situation. Furthermore, PMRC expects government to disclose its proposed tax policy reforms in relation to a shift in emphasis away from personal income and company tax by increasing consumption taxes and property taxes as they have previously been underexploited,” Zulu said.

“As talks with external creditors over the country’s external debt continue, PMRC expects government to soon reach a conclusion for Zambia’s debt to be restructured to help unlock and shift resources towards health and education. PMRC expects expenditure in infrastructure to be directed towards agro-processing and the whole manufacturing value chain. The government is also expected to strive towards achieving budget credibility through adherence to expenditure plans as outlined in the budget thereby reducing borrowing and accumulating arrears for expenditures outside the budget.”

She called on goverment to consider developing a long term, stable and consistent mining tax regime.

“The diversification in the mining sector through the local gold purchasing programme by Bank of Zambia ought to be continued to strengthen and diversify the country’s reserves. PMRC urges the government to consider developing a long term, stable and consistent mining tax regime that encourages investment in the sector while ensuring maximum tax returns accrue to the nation. This is especially required in view of new copper prices on the international market. Promotion of mineral diversification should be considered to broaden the tax base in the sector. The 2022 National Budget must consider investing more in the copper value chains to ensure the country exports value-added copper products,” Zulu said.

She said government should consider introducing stimulus packages meant for players in the tourism sector.

“In the 2022 National Budget, PMRC urges government to consider introducing stimulus packages tailor made for the players in the tourism sector to help them revamp their businesses in view of the impact of the COVID-19 pandemic,” Zulu said.

“There is need for the review of the Public Private Procurement Act to ensure it favours investment in the manufacturing sector. The government ought to consider continuing with dismantling of arrears for local manufacturers and suppliers, which will provide liquidity for re-investment. This is needed for the growth of the manufacturing sector. PMRC expects the government to continue introducing tax incentives in the energy and agriculture sectors such as the zero rating of import duty for solar equipment and farming equipment in order to attract more local investment within the sector.”

Zulu urged government to expedite reforms in debt contraction.

“The debt situation continues to be a source of concern, with public external debt conservatively standing at US$12.9bn. The government is encouraged to expedite reforms in the loan contraction and provide oversight on the legal and policy framework to ensure that the porous areas are addressed through key legislation. PMRC is elated by the government’s commitment to reforming the Loans and Guarantees Act as a way of ensuring debt management, as this will promote transparency and accountability,” said Zulu.

“This includes the Planning and Budgeting Act, the Public Procurement Act and the Public Finance Management Act. All must be looked at in addition to allied legislation. In order to curb public expenditure and borrowing, strengthening oversight functions of institutions also needs to be a part of these reforms. Therefore it is expected that reforms will be budgeted for adequately.”