TRANSPARENCY International Zambia (TI-Z) says it’s not very pleased with the 2024 national budget theme “unlocking economic potential” because the subject matter is too broad.

Meanwhile, TIZ has questioned the basis upon which government has increased CDF when there hasn’t been any comprehensive audit to ascertain its performance from the last increment.

Giving a budget analysis on Diamond TV’s Costa programme, Sunday, TIZ Policy and Research Manager Bright Chizonde said the organisation had hoped that the budget would be crafted around addressing the high cost of living.

“It (budget theme) doesn’t fit in very well. If you look at the macroeconomic contexts and social economic contexts, right now everyone is talking about the cost of living. So we were thinking that the budget will be crafted around addressing the high cost of living. The budget theme is very important, the macroeconomic objective is for the government to set a policy direction, even the budget allocations and the tax changes are all trying to address a particular theme. So if you craft a theme around unlocking the economic potential, which is a very vague or broad theme, because if I ask you, what does it mean to unlock economic potential?” Chizonde asked.

“If you look at what precedes that mention of the theme in the budget, we see that the government actually had a lot of policy directions to take in this budget. They were talking about production and productivity, they were talking about private sector investment, and they were talking about improving service delivery. So what exactly do you want to achieve? And if you have a budget which has multiple directions like this one where even the theme is too broad, you have a challenge. As Transparency International Zambia, we are not very happy with this particular theme of the budget”.

Chizonde said government would have difficulties collecting all required taxes if economic growth was not realised.

‘’The general assumption which we see here is that there will be increased economic growth, the economy is going to be bigger next year. If this assumption is not realised then we will have serious problems because you cannot collect all the taxes I’m just referring to if we don’t see the expansion in the economy. Tax rates like the VAT rate have been the same, implying that there will be more economic activity, that’s the only way we are going to collect more VAT next year. It’s important to also note that there’s a high cost of living, so are you imposing a higher burden on the people?” he said.

“Of course they have been creating levy in the 2024 national budget which is the levy on mobile money, which I think, looking at the responses I’ve gotten from people that this is not sitting well in terms of the people at the grassroots because they are looking at it to be a cost on them in terms of the use of mobile money services. But people will need to pay more taxes because that’s how the government is going to collect that money. Those are some of the assumptions they are going to use to collect that money”.

He insisted that the increase in the Pay As You Earn exemption threshold to K5,100 from K4,800 won’t significantly reduce the tax burden on citizens.

“Government had an opportunity to significantly reduce the tax burden. So you will see the Pay As You Earn (PAYE), the exemption threshold for PAYE which has been adjusted from K4,800 to K 5,100, what does that translate into? Very small benefits. In my estimation there’s a gap of about K300 between the two, so that means that you’re exempting a tax rate of about 20 percent. So that translates to very little money which is about K60. So the benefits you’re giving the households who are incurring this high cost of living is K60 per month in terms of tax relief. What does that mean? We’re talking about the middle-income earners,” Chizonde said.

“Overall we’re talking about K100 depending on what someone’s income is. What relief is that going to give in terms of next year’s situation? Again that’s not sufficient relief. If you followed our pre-budget statement in terms of expectation, we proposed about a 2.5 percent reduction in terms of tax bands that would have been enough for people to get significant relief in terms of alleviating the tax burdens that people are facing in the midst of a high cost of living”.

Meanwhile, Chizonde questioned the basis upon which government increased CDF when there had not been any comprehensive audit of the programme.

“It’s important to look at where we are coming from, the current CDF in terms of the widened scope of allocation started in 2022. That is the first budget of the UPND. Since 2022 we have not had a comprehensive Auditor General’s report on the performance of the budget. The 2022 Auditor General’s report is not yet out, we are in 2022, so it means the 2023 report will come out next year. So what is the basis upon which you’re increasing the allocation to the Constituency Development Fund if you have no idea of what’s happening exactly in terms of allocation, misapplication or misappropriation of resources? Of course there are great indications, if you have followed the CDF programme, there have been constituencies where the projects have been canceled because of indications that something happened there,” he said.

“JCTR also issued their report on the third party CDF monitoring recently, also highlighting a number of issues in the CDF programme. But the government does not have an official audit on the CDF programme as yet but they are increasing allocation. The other concern is the absorption of this programme, how much of the money is actually being utilised? If you look back to the 2023 national budget, the minister had mentioned that they had released about 75 percent of the CDF, but they were saying in terms of actual utilisation it was less than 10 percent. So that sends you a message that this programme which has utilised less than 10 percent of the funds that you are allocating, why are you continuously increasing the allocation of the CDF? Of course CDF has been increased again in this budget”.

Chizonde further urged government to see to it that health facilities had enough drugs.

“The other good thing that we can take note of in terms of safety is that the government has been paying pension benefits a bit quicker than what we have seen in the past, clearing off backlogs. That’s another opportunity that’s there to alleviate the current situation that we have. Government should also make sure that there are drugs in health facilities. Make sure that drugs are there because people who are going to spend money to buy mealie meal do not also need to spend money to buy drugs which are supposed to be available free of charge in the health facilities. If people are going to be given prescriptions, you’re adding to the cost of living. Addressing that challenge is another way of relieving,” said Chizonde.