Embrace sales tax, says Mwanakatwe
FINANCE Minister Margaret Mwanakatwe says the sales tax is fair and user friendly as it will exempt capital goods, basic food items and essential goods and services in the health, education and water sectors.
FINANCE Minister Margaret Mwanakatwe says the sales tax is fair and user friendly as it will exempt capital goods, basic foods items and essential goods and services in the health, education and water sectors.
This is meant to address the effects of cascading associated with sales tax.
The Minister, therefore, urged the business sector to embrace the tax which would become effective on July 1, this year.
Ms Mwanakatwe said to ensure the cost of production was maintained, there would be exemptions on selected inputs in priority sectors such as agriculture, manufacturing, mining and tourism.
The minister was speaking in Ndola on Wednesday night during a sales tax consultative meeting with the business sector at Levy Mwanawasa Stadium executive lounge.
She said given the exemptions provided under sales tax, it was expected that production costs would remain relatively unchanged.
As a business community you may be wondering what will happen to your outstanding Value added Tax (VAT) claims after the implementation of the sales tax,”— Ms Mwanakatwe
The minister said the sales tax would only increase prices to the extent of the number of distribution points in the production value chain.
"As a business community you may be wondering what will happen to your outstanding Value added Tax (VAT) claims after the implementation of the sales tax. I want to assure you that Government will pay off all outstanding legitimate VAT refunds,” she said. She said reconciliation would be undertaken to close off VAT and a plan would be put in place of how to liquidate the verified funds.
Ms Mwanakatwe said to help the local industry, a differentiated sales tax rate had been adopted at 16 percent on imported finished products and 9 percent on locally manufactured products.
She noted that exports would be exempted from the sales tax to make them competitive and earn the country foreign exchange.
The minister said the decision to abolish the VAT and to replace it with sales tax was necessary to stop the refund debt escalation and to create fiscal space.
And Ndola District Chamber of Commerce and Industry past President Ashu Saga said Government should work with the private sector to implement sales tax in the way that would have a positive impact on the economy and to rectify the imbalance that could occur.
Mr Saga said there was need to work together to implement a tax that was fair and workable for the long term sustainability of the county. "We need to ensure, we do not charge the consumer more than the way they were paying under the old system," Mr Saga said.