State to save over US$1bn from scrapping VAT

THE State stands to save over US$1 billion from the mining sector following government’s proposal to abolish VAT and replace it with non-refundable sales tax, Economics Association of Zambia (EAZ) president, Lubinda Haabazoka has observed.

In reaction to Finance Minister, Margaret Mwanakatwe’s budget speech to Parliament yesterday on the government’s proposal to abolish VAT and replace it with a simpler and non-refundable sales tax, Dr Haabazoka told the Daily Nation that the state was currently spending over US$700,000 towards VAT refunds to the mining industry. “This is a move in the right direction because the motive

This is a huge change in the way that the tax administration has been operating and I believe that this will significantly go towards solidifying the domestic revenue collection by government,” — Mr Dodia .

behind giving refunds is that companies that bought raw materials were refunded by the State and is reducing their cost of doing business,” explained Dr Haabazoka.

Dr Haabazoka added:”Some firms would over-claim VAT refunds which was affecting government coffers and as individuals we will not be affected when the proposal is implemented”. Meanwhile Private Sector Development Association (PSDA) president, Yusuf Dodia has also welcomed the development saying VAT refunds to the mining sector were becoming a burden to the national treasury. “When Government proposes to repeal the VAT Act, and instead of having VAT we will have sales tax, which is not claimable and ends into state coffers. This is a huge change in the way that the tax administration has been operating and I believe that this will significantly go towards solidifying the domestic revenue collection by government,” Mr Dodia said.