It's a massive K284.8bn budget

...as Finance and National Planning Minister Dr Situmbeko Musokotwane unveils one of the country's largest spending plan as 2027 budget is unveiled with a series of tax, revenue measures expected to generate an estimated K10.8 billion, as part of efforts to strengthen domestic revenue mobilisation

By BUUMBA CHIMBULU

GOVERNMENT has set the stage for one of the country's largest budget frameworks as it seeks to accelerate development and sustain economic recovery by unveiling a massive K284.8 billion spending plan for 2027.

It has also proposed a series of tax and revenue measures expected to generate an estimated K10.8 billion, as part of efforts to strengthen domestic revenue mobilisation and support the implementation of the Grow Zambia Agenda.

The proposed budget, which is from the K253.1 billion Government proposed to spend for the year 2026, is equivalent to 28.4 percent of Gross Domestic Product (GDP), will be largely powered by domestic resources, with Government projecting to raise K233.7 billion in revenues, accounting for 82.1 percent of the total budget.

This was announced yesterday in Parliament by the Finance and National Planning Minister, Situmbeko Musokotwane under the theme: "Grow Zambia: From Stabilisation to Unlocking Opportunities, Creating Jobs and Improving Livelihoods for All."

The budget comes as Government continues balancing the need to finance critical development priorities while maintaining fiscal discipline and reducing reliance on external support.

"One of the UPND's strategic focus since coming into Government has been to strengthen fiscal sustainability through improved domestic resource mobilisation as well as expenditure rationalisation. To this end, we have consistently increased domestic revenues as a share of the budget from 58.7 percent in 2021 to 76 percent in 2024 and we project to reach 82.1 percent in 2027," Dr Musokotwane said.

However, the ambitious spending plan leaves a significant financing gap, forcing Government to turn to borrowing and other funding sources to support its programmes.

According to Dr Musokotwane, a total of K41.9 billion, representing 14.7 percent of the budget, is expected to be raised through gross financing from domestic and external sources.

Government will also rely on K9.2 billion in grants, which will contribute 3.2 percent of the 2027 budget.

With nearly three quarters of funding expected to come from internally generated resources, the 2027 budget signals Government's push to strengthen revenue mobilisation while using borrowing strategically to close funding gaps.

Meanwhile, the proposed measures are aimed at broadening the tax base, promoting local industries, encouraging investment, enhancing economic equity and strengthening environmental sustainability. The changes are expected to take effect on January 1, 2027.

"The proposed revenue reforms seek to strike a balance between supporting productive economic activities and ensuring that individuals and businesses contribute fairly towards national development," Dr Musokotwane said.

A major focus of the proposals is the promotion of local manufacturing and industrialisation through increased import duties on selected products.

Under the proposals, customs duty on imported ceramic tiles will increase from 25 percent to 40 percent to protect and promote the local ceramic industry.

Government has also proposed higher taxes on selected imported aluminium products and processed meat products to encourage domestic production and value addition.

In addition, customs duty and selected goods surtax will be introduced on crude soya bean and sunflower oils, while the selected goods surtax on imported cement packaging bags and woven bags will be harmonised at 30 percent.

However, in a move aimed at supporting local manufacturing, Government has proposed a 100 percent suspension of customs duty and a Value Added Tax exemption on imported raw materials used in the production of sanitary products.

The tourism sector is also expected to benefit from selected tax incentives, with Government proposing to suspend customs duty on safari vehicles, hospitality equipment and communications infrastructure.

The measure is intended to reduce capital investment costs and improve Zambia's competitiveness as a tourism destination, in support of the country's target of attracting five million international tourist arrivals under the Grow Zambia Agenda.

The mining sector is another area targeted by the proposed reforms. Government intends to reduce mineral royalty on gold sold by artisanal and small-scale miners to Government-approved aggregators from six percent to three percent.

The measure is designed to encourage formal gold trading and improve participation of small-scale miners in the formal economy.

However, mining companies will face an increase in withholding tax on dividends from zero percent to 15 percent, bringing their tax treatment in line with companies operating in other sectors.

Government has also proposed introducing a five percent export duty on zinc concentrates as part of efforts to increase domestic revenue.

On personal income taxation, the proposed changes introduce a top marginal Pay As You Earn (PAYE) tax rate of 39.5 percent for individuals earning above K37,000 per month.

"Employees earning K37,000 or below will remain under the current tax regime. Only the portion of income exceeding K37,000 will attract the proposed 39.5 percent rate," according to Dr Musokotwane.

Meanwhile, the Value Added Tax (VAT) rate is proposed to increase marginally from 16 percent to 16.5 percent as Government seeks to strengthen revenue collection.