Patriots for Economic Progress Present Alternative Budget for 2018

THE 2018 ALTERNATIVE NATIONAL BUDGET

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.

KEY EXPENDITURE DIFFERENCES WITH THE OFFICIAL BUDGET

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.

KEY REVENUE DIFFERENCES WITH THE OFFICIAL BUDGET

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.

CONCLUSION

“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