Economy

JCTR Punch Holes In Mutati’s Budget

felix-mutati-zambia-reportsThe Zambian Centre for Theological Reflection has dug into the recently released budget by Finance Minister Felix Mutati and picked out the non-taxable income threshold of K3, 300 and below as being below the cost of living.

JCTR reckons while the exemption is welcome it still leaves a larger portion of the citizens at the mercy of the taxman.

Mutati announced a K64.5 million budget last Friday.

JCTR Press Release

Wednesday16th November 2016

New Non-taxable Income Threshold falls below Cost of Living

The month of October saw pump prices of fuel increased (Petrol from ZMW9.87 to ZMW 13.70, Diesel from ZMW 8.59 to ZMW 11.40 and Paraffin from ZMW 6.12 to ZMW 8.03).

However, also acknowledging that life will not be easy for the majority poor Zambians when government finally concludes a bailout package with the International Monetary Fund (IMF), the Minister of Finance outlined a five pillar economic recovery plan aimed to stabilise the economy but also to increase the ability of citizens to afford the cost of living.

The focus areas included strengthening social protection and creating an enabling environment that will allow citizens to actively participate in the economy.

The 2017 National Budget announced on Friday 11th November 2016 by the Minister of Finance aims to actualise the recovery plan.

The measures proposed include: an upward adjustment to the non –taxable income threshold (from the current ZMW 3,000 to ZMW 3,300), the creation of an Agricultural and Industrial Credit Guarantee Fund aimed at enhancing access to affordable credit by Small and Medium Enterprises (SMEs), irrigation development (allocated ZMW 428.5 million) to support all year round crop production, widening exports by investing in production of non- traditional exports (such as cotton, rice and soya beans, etc.), attaining a year – end inflation of no more than nine percent and increased support to the Farmer Input Support Programme (ZMW 2.8 billion from ZMW 1.3 billion in 2016).

The Jesuit Centre for Theological Reflection (JCTR) notes that the cost of living is every day becoming expensive and beyond the capacity of most poor households.

And therefore welcomes all such progressive actions meant to improve the living conditions of citizens in 2017 and beyond.

The cost of living for Lusaka as measured by the JCTR Basic Needs Basket (BNB) for an average Zambian family of five hit a first time high ZMW 5,036.28 in the month of October 2016.

Some items recording increases in price included mealie meal, beans, dark green vegetables, cooking oil, bread, sugar, tea and charcoal.

Other BNBs recording increases included: those for Kabwe from ZMW 3,475.24 in September to ZMW 3,498.15 in October, Mongu from ZMW 2,998.85 in September to ZMW 3,087.65 in October, Monze from ZMW 3,069.80 to ZMW 3,133.30, Kasama from ZMW 2,869.32 to ZMW 3,078.76 and Livingstone from ZMW 3,699.66 in September to ZMW 3,849.27.

Those recording minor reductions but still remaining high include Mansa – ZMW 2,738.14 in September while ZMW 2,715.96 in October and Ndola, ZMW 4,416.26 in September and ZMW 4,375.83.

The JCTR notes that measures such as an adjusted upward non –taxable income threshold (from the current ZMW 3,000 to ZMW 3,300 in 2017), in as much as will cushion hardship for some employees, are not responsive to the reality on the ground for most employees.

The national average cost of living for an average family of five as surveyed by the JCTR Basic Needs Basket is ZMW 3,478.31, reflecting a shortfall of ZMW 178.31 in the announced income tax –exempt threshold to enable an average Zambian family to afford cost of living.

This shortfall however is worse for the urban poor in towns like Ndola, Solwezi and Lusaka whose shortfall ranges between K1, 000 to K1, 700.

There is therefore need for more effort to improve the living conditions of the majority poor Zambians.

Efforts such as enhancing access to affordable credit by SMEs, irrigation development, widening exports by investing in production of non- traditional exports and increased support to the Farmer Input Support Programme (FISP) will also need to be accompanied by skills development and well researched market opportunities. Other measures such as fair wage policy will also be necessary.

“These have potential to increase productivity in the country, spar industrialisation, increase job opportunities and increase capacity of households to afford cost of living”, observes the JCTR.

The JCTR urges strict adherence in implementing national plans especially those with potential to have immediate, medium term and long –term benefits on citizens.

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