Patriots for Eco­nomic Progress Present Al­ter­na­tive Bud­get for 2018

Zambian Business Times - - POLITICS & FISCAL PLANNING -


The Patriots for Eco­nomic Progress pro­posed to spend a to­tal of ZMW119.2 bil­lion in 2018 or 38.3 per­cent of the Gross Do­mes­tic Prod­uct. Of this amount, ZMW103.3 bil­lion or 97.7% of the to­tal bud­get would be fi­nanced by do­mes­tic rev­enues and ZMW2.4 bil­lion or 2.3% will be from grants by var­i­ous Co­op­er­at­ing Part­ners. There will be no por­tion of the bud­get that will be fi­nanced from do­mes­tic or ex­ter­nal bor­row­ing.


The al­lo­ca­tions to the re­pay­ment of both for­eign debt and do­mes­tic debt were re­duced be­cause the Patriots for Eco­nomic Progress has pro­posed to in­sti­tute a to­tal freeze on the con­trac­tion of new debt given the de­te­ri­o­rat­ing debt situation as well as de facto debt trap in which the coun­try has found it­self.

The al­lo­ca­tion to the Zam­bia Rev­enue Au­thor­ity was been in­creased by more than 350% from ZMW848,664,000 to ZMW4,075,063,280 so as to en­hance the gov­ern­ments ca­pac­ity to col­lect the tax that is due to the trea­sury. About 55% of the al­lo­ca­tion would be used to em­ploy about 20,000 ad­di­tional ZRA staff at var­i­ous lev­els, about 25% will be used to pro­cure ad­di­tional fa­cil­i­ties and equip­ment, about 10% will be used to im­prove the con­di­tions of ser­vice for all ZRA staff while the bal­ance will be used for other pur­poses. The ul­ti­mate situation aim by PEP is to have as many ZRA of­fices as there are po­lice sta­tions and po­lice posts across the coun­try.

The al­lo­ca­tion to Con­stituency De­vel­op­ment Fund has been in­creased by about 900% from ZMW218, 400,000 to ZMW1, 946,000,000. This is in or­der to take de­vel­op­ment closer to the peo­ple the PEP high­lighted.

Al­lo­ca­tions to de­fence as well as pub­lic or­der and safety were sig­nif­i­cantly re­duced by about half for the sim­ple rea­son that the great­est threat to our na­tional se­cu­rity at the mo­ment is high lev­els of poverty among the cit­i­zenry and not any armed at­tack from en­emy forces. There­fore, enough re­sources re­quire to be al­lo­cated to fight­ing the real en­emy which is poverty.

The PEP pro­posed al­lo­ca­tion to Roads In­fra­struc­ture be re­duced by about 40% be­cause there has been too much em­pha­sis on road in­fra­struc­ture in the re­cent past, at the ex­pense of other types of in­fra­struc­ture such as dams, tourist fa­cil­i­ties etc. Much as roads are a cat­a­lyst to eco­nomic growth, they’re not the only cat­a­lyst.

The al­lo­ca­tion to stu­dent loans and schol­ar­ships was in­creased by about 450% from ZMW557, 000,000 in the of­fi­cial bud­get to ZMW3,400, 000,000 in the al­ter­na­tive bud­get. All stu­dents in govern­ment ter­tiary in­sti­tu­tions would be given schol­ar­ships and the top 50% best per­form­ing stu­dents in all pri­vate in­sti­tu­tions will be given schol­ar­ships. The Patriots for Eco­nomic Progress be­lieves that if there’s a sin­gle thing that a coun­try needs to in­vest in, it is the ed­u­ca­tion of its cit­i­zens.


The pro­jected amount of com­pany in­come tax to be col­lected has gone up by about 250% from ZMW6,115,940,000 to ZMW16,086,920,000, largely due to the in­creased ca­pac­ity of ZRA which will en­sure higher lev­els of tax com­pli­ance among tax pay­ers.

The pro­jected amount of per­sonal in­come tax in­clud­ing PAYE pro­jected to be col­lected has gone down from ZMW10, 264,020,000 to ZMW7, 241,860,000 largely due to the re­duc­tion of PAYE tax rates from a max­i­mum rate of 37.5% to a flat rate of 25%, as well as an in­cre­ment in the tax ex­empt thresh­old to ZMW5, 000. This mea­sure was nec­es­sary in or­der to en­sure eq­uity in the dis­tri­bu­tion of the tax bur­den as for­mally em­ployed tax­pay­ers were shoul­der­ing an un­rea­son­ably large tax bur­den, the PEP said. This is in line with the theme of this PeP 2018 Al­ter­na­tive Na­tional Bud­get, which is “Widen­ing the Tax Base and Re­duc­ing the Tax Bur­den on the Few Com­pli­ant Tax­pay­ers, to en­sure Ef­fec­tive Do­mes­tic Re­source Mo­bi­liza­tion so as to Elim­i­nate Reliance on Donor Fund­ing”.

The pro­jected amount of value added tax to be col­lected has sig­nif­i­cantly gone up­wards from ZMW12,369,470,000 in the of­fi­cial bud­get to ZMW28, 936,750,000 in the al­ter­na­tive bud­get, largely due to the greater ca­pac­ity cre­ated for ZRA which will en­able them to bet­ter en­force the tax laws of the land.

The PEP pro­posed a new cat­e­gory of tax called “Min­ing Turnover Tax” which is set to re­place com­pany in­come for mines. This will en­sure that min­ing com­pa­nies are pre­vented from dodg­ing the pay­ment of com­pany in­come tax through com­plex tax plan­ning schemes. This also re-en­forces the theme of the bud­get to widen the tax base the PEP pro­posed.

The pro­jected amount for non - tax rev­enues has sig­nif­i­cantly gone up by about 200% from ZMW7,947,240,000 in the of­fi­cial bud­get to ZMW23,967,720,000 in the PeP 2018 Al­ter­na­tive Na­tional Bud­get. This is largely due to the re­forms planned to be un­der­taken that will achieve two key ob­jec­tives of plug­ging off rev­enue leak­ages and ex­ploit­ing all po­ten­tial non- tax rev­enue streams.


“Our econ­omy is cur­rently on a down­ward spi­ral. For all in­tents and pur­poses, we are al­ready in a debt trap as it is un­likely that we as a coun­try can con­sis­tently gen­er­ate the rev­enue needed to ser­vice our to­tal debt of about $42 bil­lion with­out un­der­tak­ing a to­tal par­a­digm shift with re­gard to the way we do what we do.

If we are go­ing to sur­vive the cur­rent eco­nomic situation and safe­guard our des­tiny as a na­tion, we need to do two things. Firstly, we need to stop pre­tend­ing that all is well when it isn’t. Sim­ply put, we need to face our demons. Se­condly, we need to be able to sum­mon all our courage and un­der­taken un­prece­dented and un­ortho­dox re­forms.

We are cur­rently faced with an ab­nor­mal situation in which our econ­omy has not stag­nated but has ac­tu­ally re­gressed as ev­i­denced from the drop in our Gross Do­mes­tic Prod­uct from around

$28,5 bil­lion in 2011 to about $20,5 bil­lion in 2016. There­fore, we can­not un­der­take or­di­nary mea­sures to re­solve an ex­tra­or­di­nary situation. What we ac­tu­ally need are ex­tra­or­di­nary mea­sures.” Con­clud­ing Re­marks by PEP Pres­i­dent Sean Enock Tembo

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