By BUUMBA CHIMBULU
GOVERNMENT has launched aubiquitous K119.6 billion budget designed to engender economic progress while addressing the debilitating ravages of Covid-19 and putting more money in people’s pockets by raising the taxable threshold from K3, 300 to K4, 000 to benefit the poor and disadvantaged.
More tax relief measures to improve business cash flows have been proposed by Finance Minister, Bwalya Ng’andu, as he prioritises economic stimulation during the Covid-19 period, while unveiling one of the toughest national budget in the history of this country.
Covid-19 related factors have forced Dr Ng’andu to increase the size of the plan by K13.6 billion as he proposes to spend K119.6 billion in 2021 from K106 billion which was planned for this year.
Government’s focus therefore in the medium-term is to contain the spread of the virus, mitigate the effects of the pandemic and restoring macroeconomic stability as well as growth.
While increasing the size of the national budget, Dr Ng’andu announced more tax relief measures beyond the ones provided in April this year, in an effort to stimulate the economy whose growth has been eroded by Covid-19 factors, among others.
Other measures include introduction of a local content allowance for income tax purposes for utilisation of selected local raw materials to encourage local content and value addition.
Investment tax incentives have been reduced from US$500, 000 to US$100, 000 to Zambians
Dr Ng’andu also proposed to reduce the investment threshold for a Zambian citizen to qualify for tax incentives under the Zambia Development Agency Act to US$100, 000 from US$500, 000 for those intending to operate in a priority sector, a multi facility economic zone or industrial park.
He said this yesterday during the 2021 national budget presentation to Parliament.
“To stimulate economic activity in other sectors, I propose to remove import duty on copper ores and concentrates to encourage local processing, suspend import duty on importation of refrigerated trucks to support the domestic and export markets.
“I propose to reduce import duty to five percent from 25 percent on selected trimmings to promote the local garments and textile industry and lower import duty to 15 percent from 30 percent on electric motor vehicles to reduce the use of fossil fuel,” he said.
Dr Bwalya however amended other tax measures to support local production, build resilience and mitigate the revenue loss arising from the relief actions.
He proposed to increase import duty to 40 percent from 25 percent on agro products such as beef and beef processed products, and fish among others imported from outside the SADC and COMESA regions.
Meanwhile, Dr Ng’andu in his K119.6 billion budget was targeting to reduce the fiscal deficit to 9.3 percent of Gross Domestic Product (GDP) in 2021 from the 11.7 percent projected outturn for 2020.
He is also targeting to increase Gross International Reserves to at least 2.5 months of import cover and achieve domestic revenue collections of not less than 18.0 percent of GDP.
“Government proposes to spend K119.6 billion in 2021 which translates to 32.6 percent of GDP. Of this amount, K68.0 billion, representing 18.5 percent of GDP, will come from domestic revenues and grants. The balance of K51.6 billion will be raised through financing.
“Out of this amount, K53.3 billion will be raised from taxes while K12.7 billion will be from non-tax revenues. In addition, K2.0 billion will be grants from our Cooperating Partners. The balance of the total amount will be financed through borrowing K17.4 billion from the domestic market and K34.2 billion will be from external sources,” he said.
IMPORT DUTY SUSPENDED!
a) Lowered import duty to 15 percent from 30 percent on electric motor vehicles
b) Suspended import duty on importation of refrigerated trucks to support the domestic and export markets;
c) Reduced import duty to five percent from 25 percent on selected trimmings to promote the local garments and textile industry; and
d) Removed import duty on copper ores and concentrates to encourage local processing;