Zambia Association of Chambers of Commerce and Industry calls for new tax system


THE Zambia Association of Chambers of Commerce and Industry (ZACCI) has urged the Government to consider changing the current taxation system on petroleum products in the 2013/2014 Budget, to mitigate the high cost of fuel after removal of  the subsidy.

In its submission to the Ministry of Finance, ZACCI  has proposed that, the taxation system on petroleum products and the 0.7 per cent energy regulation fee, be turned into a consolidated absolute tax.

ZACCI said in its submission that an ad valorem tax was not a conducive tax for the petroleum industry because it led to triple taxation of petroleum products and compounded the increase in fuel prices, each time there was an increase in the price of oil on the international market, coupled with fluctuations in  exchange rates.

With an ad valorem tax, any change in the cost of fuel has a significant effect on the industry and the economy as a whole.

ZACCI said with an absolute tax, it would be easy to mitigate the impact of changes in fuel prices in the country, resulting from fluctuations in the oil prices on the international market as it would make it easy for the Government to plan.

The cost of fuel affects all sectors of the economy, adding that Zambia has become uncompetitive in the export sector, partly due to the high fuel cost.

The change in taxation system from ad valorem tax to a consolidated absolute tax would mitigate the high cost of petroleum products and would have a positive impact on the economy.

“In terms of revenue, there is no loss of Government revenue because it can still collect the amounts that it intends to get from the petroleum sector.

‘‘Government can start by estimating how much revenue it wants to collect from the petroleum industry and how much it is being paid now per litre of fuel.

This  should be reviewed in line with the consumption of fuel in the country,” ZACCI stated.