The Minister of Finance Honorable Alexander Chikwanda, on 12th October 2012 announced the proposed revenues and expenditures for the year 2013. The theme for this year’s budget is “delivering inclusive development for social justice”. Agriculture sector again forms part of the four priority sectors besides tourism, manufacturing and infrastructure.
On the agriculture front, the Minister of Finance indicated that the focus would be on boosting crop and livestock production; strengthening the forward and backward linkages in the sector. The government intended to expand the scope of FISP to include Soya beans, cotton, sunflower and rice. Further, the government would also scale up investment in extension services, irrigation research and development, crop storage facilities, roads networks to improve access to the market. For the livestock sector, the budget would focus on animal disease control and implement the disease free zones. Further the Minister indicated that FRA would stick to managing the strategic reserves and ensure consistency on crop marketing policy. With the above measures, the government expected the agriculture sector to create about 550,000 new jobs in the next five years.
The total proposed budget amounts to ZMK 32.2 Trillion of which 76.8%, would be domestically generated; 4.7%, would come from the cooperating partners and 18.4%, from both domestic and foreign borrowing. The agriculture sector had been allocated a total of ZMK 1.897 trillion, out of which FISP and FRA had been allocated ZMK 500 Billion and ZMK 300 Billion respectively.
On the other hand the government had announced a number of measures for revenue generation which among them included the increase of withholding tax rate on payment to non-residents for management or consultancy fees from 15% to 20%, increase the tax deduction for pension contribution to ZMK 225, 000 per month. The government had also proposed to remove tax on interest earned by individuals from savings and deposit accounts and to abolish the medical levy.
On VAT, the Minister had proposed the following changes;
• Wheat and bread should be zero rated for value added tax purposes. Further the government had also proposed to reduce the validity period within which a tax invoice can be used to make a VAT claim from 12 months to 6 months.
• Increased the VAT registration threshold to K800 million from the current K200 million.
On customs duty, the government had proposed the following;
• To remove customs duty on a wide range of mechanical and electrical machines which include engines of all types, cranes of all types, conveyor belts, and machines for cutting, grinding, polishing, drilling and welding, vacuum and liquid pumps and sprayers of all types.
• To remove customs duty on wind powered engines, gas stoves and electrical capacitors.
The Minister also proposed to harmonize corporate income tax for income earned from the manufacture of organic fertilizer to 15 percent from the current 35 percent to bring it in line with that of manufacture of chemical fertilizer.
Beside the above measures, the Minister of Finance highlighted a number of key areas of interventions such as investment in infrastructure development both in energy, road and rails which is positive.
The Minister had also indicated that fees for services provided by government departments would be revised upwards in due course as they had been stagnant for too long. The Union will keep track and advise the areas that would be affected by these measure as and when the changes are effected.
A detailed analysis and reaction to the 2013 budget will be issued in due course.