Removal of VAT to hurt small famers - NUSF

THE removal of value added tax (VAT) by Government will have a direct negative impact on local agriculture, says National Union for Small-Scale Farmers (NUSF) general secretary Frank Kayula.

Dr Kayula said that the negative impact would not only be felt by small-scale farmers but the local processors who bought produce from local farmers.

In an interview Dr Kayula feared that processors would not resort to importing raw materials than buying locally.

Dr Kayula cited soya beans crude oil as one of the raw products which had become more expensive on the local market after the removal of VAT.

“The withdrawal of VAT has come with uncertainty to processors because it will now be cheaper to import than to buy locally,

“This has led to the closure of some companies such as Zamanita, Global Industry and Cargill oil plant. This will result in a lot of small-scale soya beans farmers to lose market, because these companies cannot be buying the soya just to satisfy the farmers,” he said.

He said that because of the move, more than 1, 000 small scale farmers countrywide would have no access to market for their produce.

Dr Kayula said that processing companies would have no option but to relocate to countries where there were trade protection.

“We are scared to protect our local producers in the name of belonging to World Trade Organisation, does it mean that other countries that protect their producers don’t belong to this organization. This will mean that farmers will only depend on producing maize crop which does not pay much,” he said.

He warned that Government should be prepared to help small-scale farmers who would need relief maize as a result of this. And Dr Kayula stressed that mining should not be a litmus test on all other sub-sectors of the economy.

He said that the withdrawal of VAT should have be restricted on mines not all the sub-sectors. The Zambian government announced in its 2019 national budget the withdrawal of its Value Added Tax. Plans and replaced it with sales tax only chargeable to the consumers at the end of the supply chain

During the 2019 budget presentation, Finance Minister Margaret Mwanakatwe announced that Government will abolish (VAT) and replace it with a non-refundable sales tax starting in April 2019, a move which she said was likely to help the government boost revenue collection and bring down mounting debt.

Ms Mwanakatwe said the Zambia Revenue Authority would finalise audits of all outstanding VAT refund claims and collect any unpaid taxes before making the change.