…as Mutati unveils a K64.5 billion Budget

Sat, 12 Nov 2016 13:22:26 +0000

A K64.5 billion budget for 2017 was yesterday unveiled by Finance Minister Felix Mutati characterised by difficult decisions aimed at restoring growth and development.

And Mr Mutati has announced that Government is in the process of disengaging itself from the process of procuring petroleum products and that by 31st March next year, the process would be undertaken by the private sector to ensure efficiency.

Under the theme of “Restoring Fiscal Fitness for Sustained Inclusive Growth and Development”, the budget has been increased by more than K11 billion from 2015 and will be anchored on interventions in agriculture, industrialisation, tourism, and mining. Minister Felix Mutati told Parliament yesterday that Government planned to refinance the budget mainly through domestic revenue collection. Mr Mutati explained that out of the K64.5 billion ─ representing 27.7% of the GDP ─ K42.94 billion would be raised through domestic revenues, K2.23 billion through grants from co-operating partners, and K19.33 billion through debt financing. He said resources had been allocated to ensure that Government mitigated the effects of the economic recovery programme while supporting growth in key sectors of the economy. Mr Mutati explained that Government would also increase domestic income collection while ensuring that the tax burden was borne equitably.

“Many of our citizens have implored Government to take measures to ensure that the tax base is broadened, made fairer and enhances domestic resources,” he said. As such, the minister said Government would introduce duty on copper concentrates at the rate of 7.5 percent while increasing the advance income tax rate paid at importation of goods from 6 percent to 15 percent. Mr Mutati also proposed to increase Pay As You Earn from K3000 to K3300 monthly and adjust the income bands accordingly. “The top marginal tax rate will similarly increase from 35 percent to 37 percent,” he said. Mr Mutati further proposed to restructure the current turnover tax regime by introducing bands and presumption amounts.

Under Value Added Tax (VAT), Mr Mutati proposed to put copper concentrates on the import deferment schedule to promote local mineral processing. He also proposed to abolish the VAT group registration scheme to enhance the credibility of risk-based tax audit. He said the budget would rebalance the economic and financial position in Zambia, therefore, setting conditions for sustained economic growth.