Chikwanda’s budget ready today

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Chikwanda’s budget ready today
Chikwanda’s budget ready today

The national spotlight today falls on Minister of Finance Alexander Chikwanda as he unveils the 2014 national budget in Parliament. The budget is expected to address measures to be taken to overcome various challenges in line with continued delivery of the promises made by the Patriotic Front government.
This will be the second PF government wholly-owned budget and many people will be looking forward to knowing what is lined up for development, job creation and poverty reduction.
President Sata has already set the tone for the budget, with Government targeting growth in gross domestic product of more than 7 percent this year.
Next year’s budget is projecting growth in GDP (the total amount of goods and services produced) at more than 8 percent.
When opening the second session of the 11th National Assembly, President Sata said the budget will ensure pro-poor and inclusive growth.  The focus will be on education, health, agriculture, local government and housing, improved governance and a focus on rural development.
In this year’s budget K4.39 trillion (unrebased) was set aside for the transport sector with the road subsector getting K3.43 trillion while railway infrastructure got K642.6 billion. The communication sector got K122.7 billion while tourism got K63.8 billion.
With the ongoing massive infrastructure works, the budget is likely to maintain this so that the projects are completed.
Some observers, however, have noted that Government wants to shift from an expansionary budget to constrained expenditure which could stall some of the ongoing projects but only Mr Chikwanda knows the position as at now.
Some experts want Government to review its tax structures to avoid relying on the few formal workers, saying taxing them heavily has potential to slow down economic growth.
This year Pay as You Earn was the highest contributor to government revenue accounting for K5 trillion unrebased while company tax contributed K4.7 trillion.
But with the ongoing massive infrastructure works, it is expected that Government will review revenue measures including expanding the tax base so that these works continue.
The budget is also going to review taxes and seal loopholes to avoid tax avoidance.  Mr Sata also said the framework for granting incentives will also be reviewed while audit trials will be enhanced so that export volumes are correctly receipted.
There will also be other indicators such as well-managed borrowing from the domestic market, reduced lending rate, single digit inflation maintenance of single digit inflation and stable exchange rates as well as increased private sector credit.
So far the government has increased civil servants’ salaries and in line with the presidential speech, the minister’s focus should be on continued infrastructure development in the road sub-sector and education, health and agriculture sectors including projects such as irrigation, crop diversification as well realigning savings from removal of subsidies.
Institutions such as Zambia Union of Financial and Allied Workers feel that workers are anxious to see how the government will broaden the tax base so that it captures the informal sector instead of just relying on the few formal workers who are heavily taxed.
Many civil society organisations have also called on Government to increase the tax exempt threshold to ease pressure on the formal workers who are bearing the brunt of providing revenue and yet the mines only paid less than K2 trillion compared to income tax from PAYE at K5 trillion in unrebased currency.
These are some of the expectations by some stakeholders in next year’s budget but for now people can only hope that Mr Chikwanda will put more money in people’s pockets.
But the truth is that he has a tough time to deliver more money given the realities of what is happening in the global economy where the Eurozone economy is still sluggish, just in the USA, copper prices are bearish (retreating), China’s economy is not very vibrant and so is its demand for copper while back at home Zambia Revenue Authority is struggling to beat its targeted tax collections.

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3 COMMENTS

  1. There’s definately a great deal to learn about this topic.

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