KAMFINSA PF member of parliament Christopher Kang’ombe says government can reintroduce fuel subsidies by cutting unnecessary expenditure in the 2022 budget.
Commenting on Finance and National Planning Minister Dr Situmbeko Musokotwane’s remarks that government was already subsidising fuel by removing some taxes and it cannot do more, Kang’ombe said subsidies should not be viewed as an unnecessary expenditure.
“First of all, the issue of subsidies should be viewed from the context of an expense. People should not look at it like it’s an unnecessary expenditure. Subsidies are huge from the point of view of how the impact on the economy is to be minimised because clearly, the high cost of fuel has got an impact on three areas. The first area or the first affected sector is the general economy, so production cost will go up, that is the first issue. Secondly, there are people we call low-income earners, those who get maybe a K2,000 salary, those who get K1,500, those who get around K3,000, those are low-income earners, those will be affected because their buying power will reduce,” he said.
“The second group that will be affected are those that are not employed, because if I want to proceed from Kitwe to Ndola and I’m unemployed, I have no income. So the cost, me looking for that extra, requires that I should speak to maybe 15 people to help me, for me to get the money. So if the Ministry of Finance begins the conversation of who is affected, on which sector is the impact high, the Ministry will not have issued the statement he issued yesterday, the Ministry would have come to the press briefing and said ‘we are alive to the fact that the economy is affected, the low income earners are affected and the unemployed are affected’, that should be the beginning of the conversation. Now if the minister agrees with me that these three areas need attention, then the reintroduction of subsidies has got a justification, why has it got justification? The budget [which] was approved in 2022 has got the income side and the expenditure side, the people determining expenditure is the government.”
He said the Ministry of Finance should review its priorities in the national Budget.
“So the Minister of Finance and Cabinet will sit and say we will spend so much money on this sector, we are not saying reduce subsidies on agriculture, we are saying Cabinet, like next week, they are having Cabinet meeting, they should have a cabinet meeting where Ministry of Finance goes to Cabinet and says ‘your Excellency, following our items for expenditure this year, we are going to get money from these two budget lines to create savings for subsidies’. So step number one for the Ministry of Finance to have subsidies is to cut on expenditure, meaning they should change their priorities in the national Budget,” Kang’ombe said.
“The second thing they have to do is to identify taxes, some tax holidays. For instance, they have given K4 billion tax holiday to the mines. You are aware that mineral royalties tax has been made tax deductible, we are not saying they have done away with mineral royalties no, we are saying mineral royalties are there but it has been made tax deductible. Now, when you make mineral royalty tax deductible you lose K4 billion, so we lost K4 billion in taxes. Cabinet can approve that for this year alone, just for 2022, they can do away with the tax comfortability mineral royalty tax, so that we earn back that K4 billion.”
Kang’ombe said government was not willing to reintroduce subsidies because it wanted an IMF bailout package.
“Cabinet can sit next week to cut expenditure on certain items which are not priorities so that most can be done next year. Those are the three things they have to do. Acknowledge that is necessary, reintroduce certain taxes then cut on expenditure on certain sectors that may not be priority for this year. In short, my view as a parliamentarian and someone who understands the impact of the current high cost of fuel is that they need to reintroduce subsidies and it can be done if they want to. The only reason they don’t want to reintroduce subsidies is because the IMF has said ‘don’t reintroduce subsidies’ it has nothing to do with the budget, it has nothing to do with the capacity of the country no! They have been basically told by the IMF that we can’t give you a bailout package if you reintroduce subsidies, that’s the only reason,” said Kang’ombe.