That's the way the money goes...

Last week saw the 2013 Zambian Budget presented to the National Assembly by the Finance Minister, Alexander Chikwanda.

 

Main Highlights:

GDP Growth Rate

2012: 7.1%

2013: 6.0% The Chinese economic slow-down and the fall in price of copper together with borrowing and fiscal deficit are said to be responsible for the failure to meet this year’s target,

2014: 7.0% (Proposed)

 

Jobs
200 000 ‘decent’ jobs.  That means permanent and reasonably paid employment. This year 60 000 jobs were created, some permanent but unfortunately many were just temporary ones in construction.

 

Inflation
It is running at 7% per year and the target is to bring it to 6.5% in 2014

 

Borrowing
$2bn to be borrowed. $1bn to be used to service existing debt.

 

Domestic Tax Raising
This will amount to 20% of GDP. 55% of this will go on public sector wages. A 2 year wage and recruiting freeze in public sector is envisaged. Borrowing is set at 2.5% of GDP and the deficit is expected to be no more than 6.6%.

The Government will raise the tax on cellphone airtime to 15% and tax financial transactions into, within and out of Zambia at 0.2% of their value. One of the latest improvements and innovations in Zambia has been the ability to transfer money at reasonable rates to other areas of the country using your cellphone, instead of relying on town-based banks and Western Union-type Companies.

Plastic carrier bags will now also carry duty. Carelessly discarded supermarket plastic bags are a blight on the landscape and a danger to cattle and livestock. Beer will carry 60% duty and winnings from forms of gambling will be taxed at 20%

The duty on crude oil has been removed. It will be interesting to see what effect this has at the pump. The fuel supply chain in Zambia is a powerful vested interest.

10% duty has been put on base and semi-processed metals to try and stimulate home industries to add value before export or release on the home market. The zinc roofing sheets we bought for Magumwi now cost us K5 more per sheet.

Some follow up to last year’s revelations of the tax avoidance or tax reduction schemes carried out by some multi-national companies is evident in a 15% withholding tax being laid on profits distributed by branches of foreign firms.

 

Total Expenditure

K42bn - US$8bn

K30bn is to be raised domestically

K2bn will come through partners

K10bn is to be found through foreign and domestic borrowing

 

Areas of Expenditure
56% will go on infrastructure; some of this to new district and provincial centres.

17.5% will go to education towards the building of 53 Secondary Schools, 150 Primary School Classroom blocks and 3 Teacher Training Colleges

11.3% will be spent on Health including 650 Health Posts

7% is allocated to Agriculture mostly for diversification purposes. Silos, diptanks and irrigation were other areas mentioned.

 

PAYE Threshold

This has been raised from K2200 to K3000(US$600). The rates of Income Tax remain the same at 25%, 30% and 35% respectively.

 

Monthly Income 2013	Rate	Monthly Income 2014	Rate
0-K2 200.00	0%	0-K3000.00	0%
K2200.01-K3000.00	25%	K3000.01-K3800.00	25%
K3000.01-K5900.00	30%	K3800.01-K5900.00	30%
> K5900.00	35%	>K5900.00	35%