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Mwanakatwe outlines more taxes in 2019 budget, as CSOs protest against corruptionBy Stuart Lisulo and Tenson Mkhala on 28 Sep 2018
Government has unveiled a record-breaking K86.8 billion national budget next year expected to be supported by increased tax revenues amounting to K47 billion, nearly K6 billion more than last year’s budget.
And government has made significant changes to the mining fiscal regime, which will see an increase in mineral royalty rates by 1.5 percentage points at all levels of the sliding scale.
Meanwhile, Finance Minister Margaret Mwanakatwe made an impassioned appeal to Zambia’s foreign cooperating partners to continue supporting the scandal-ridden Social Cash Transfer scheme.
And Civil Society Organisations protested along Parliament Road today as the 2019 budget was being presented, to signify displeasure with government’s mismanagement of public resources.
Speaking during her presentation of the 2019 national budget in Parliament, Mwanakatwe proposed to roll out an increased K86.8 billion budget next year, or 28.9 per cent of Gross Domestic Product (GDP), up from K71.6 billion in the 2018 national budget.
“Mr. Speaker, Government proposes to spend K86.8 billion or 28.9 per cent of GDP in 2019,” Mwanakatwe told Parliament, Friday.
To finance next year’s budget, government proposed that K56.1 billion will be derived from total domestic revenues of which total tax revenues amounting to K46.95 billion are expected to support next year’s budget, which will constitute around 54.1 per cent of the national budget.
Tax revenues anticipated to fund the 2019 budget are up from K41.1 billion announced in the 2018 budget.
A detailed breakdown of the income expected from taxes to fund next year’s budget include: an increase in personal income tax to K11.4 billion, up from K10.2 billion, including Pay As You Earn (PAYE), in the 2018 budget; while company income taxes are expected to contribute K7.2 billion next year, up from K6.1 billion in the 2018 budget.
Withholding taxes and others projected have also been increased to K4.6 billion in next year’s resource envelope, up from K3.9 billion in the current fiscal year.
A notable introduction in next year’s budget is an allocation for fees and fines, which the government has projected to gather at least K4.2 billion as part of its non-tax revenues, while mineral royalties will skyrocket to K4.9 billion in 2019, up from K3.5 billion this year.
To reflect firm implementation of government’s austerity measures, Mwanakatwe disclosed that recruitment of frontline personnel will be limited to only 3,500, among others.
“The key measures that government will undertake include the following: (i). Significant reduction in expenditure on administrative parts of the public service so as to prioritise allocations to key service delivery expenditures such as drugs; (ii). Controlling the growth in the wage bill by restricting recruitment to only 3,500 frontline personnel; (iii). Scaling down domestically-financed capital expenditure by phasing the completion of existing projects,” she said.
And Mwanakatwe announced significant changes to the mining fiscal regime, which will see an increase in mineral royalty rates by 1.5 percentage points at all levels of the sliding scale.
“As mineral resources are a depleting resource, it is vital to structure an effective fiscal regime for the mining sector to ensure that Zambians benefit from the mineral wealth our country is blessed with,” Mwanakatwe explained.
“In this regard, I propose the following measures: (i). Increase mineral royalty rates by 1.5 percentage points at all levels of the sliding scale; Introduce a fourth tier rate at 10 per cent on the sliding scale mineral royalty regime, which would apply when copper prices rise beyond US $7,500 per metric tonne.”
Among other measures to be introduced, the Finance Minister also pledged to roll out import duties of five per cent on copper and cobalt.
“Introduce an import duty at the rate of 5 per cent on copper and cobalt concentrates; introduce an export duty on precious metals including gold, precious stones and gemstones at the rate of 15 per cent; and lift the suspension of the export duty on manganese ores and concentrates, which was put in place in 2012 and increase this duty to 15 per cent from 10 per cent,” she narrated.
On Zambia’s export earnings performance this year, Mwanakatwe told Parliament that copper export earnings contributed over US $3 billion to the total export earnings.
“Export earnings increased by 20.7 per cent to US $4.6 billion during the first half of 2018 from US $3.8 billion over the same period in 2017. Copper export earnings were the largest contributor at US $3.5 billion from US$2.9 billion following an increase in both price and export volumes,” Mwanakatwe explained.
Meanwhile, Mwanakatwe made an impassioned appeal to Zambia’s foreign cooperating partners to continue supporting the scandal-ridden Social Cash Transfer scheme.
This follows the freezing of UKAid, among other key donors, who insisted on being refunded the stolen aid meant for Zambia’s poor and vulnerable population that was distributed via the Social Cash Transfer scheme.
“Recently, there has been concerns by stakeholders regarding the administration of the Social Cash Transfer scheme. Mr. Speaker, His Excellency, Mr. Edgar Chagwa Lungu, President of the Republic of Zambia, remains resolute to fully address stakeholder concerns, and appropriate action will be taken in line with the findings of the forensic audit that is underway. I, therefore, appeal to all our cooperating partners to continue supporting this noble programme,” she pleaded.
Earlier, Parliament heard that Zambia’s external public debt had marginally risen to US $9.4 billion representing 34.7 per cent of GDP from US $8.7 billion as at end-December 2017.
“The increase was on account of disbursements on existing loans. The total stock of government guaranteed debt stood at US $1.2 billion as at end-June 2018,” Mwanakatwe said.
She also insisted that assertions that public assets were being put up as collateral for contracted loans were “unfounded.”
“From the onset, I would like to state that Zambia is a sovereign and unitary state, as enshrined in the Constitution and is also governed by international law. As a sovereign state, we make decisions that foster the best interests of our people. Therefore, any insinuations on government surrendering strategic assets to foreign interests are unfounded,” said Mwanakatwe, amidst a roar of cheers from backbenchers in the House.
The 2019 national budget was presented under the theme: “Delivering Fiscal Consolidation for Sustainable and Inclusive Growth.”
As the budget was being presented, about nine CSOs lined up Parliament Road to express displeasure over the rampant corruption in government, as well as the lack public resource accountability.
However, some PF cadres attempted to disrupt the protest which was permitted by Home Affairs Minister Stephen Kampyongo, and police arrested at least seven.
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About Stuart Lisulo
Stuart Lisulo is an experienced Zambian journalist with a focus on business news.
Email: stuart [at] diggers [dot] news
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