Maravi

‘It’s not too late to zero rate agricultural products for VAT’

‘It’s not too late to zero rate agricultural products for VAT’
By Kabanda Chulu
Thu 07 Jan. 2010, 04:00 CAT

ZAMBIA National Farmers Union (ZNFU) has said it is not too late for finance minister Situmbeko Musokotwane to zero rate agricultural products for value added tax (VAT) purposes in a bid to reduce costs of production and stimulate demand.

Under the 2010 budget, Dr Musokotwane placed most agricultural products on VAT exempt category and this does not favour farmers because VAT is paid on certain inputs even before the process of production begins.

“This makes it difficult for local products to compete on level terms with imported products as the imported products are not subjected to any VAT upon importation while producers in surrounding countries, such as South Africa are able to reclaim all their input VAT,” Zimba said.

“It is in this line that ZNFU made specific proposals during the 2010 budget submissions and requested for agricultural products to be zero rated for VAT purposes in a bid to reduce costs of production, stimulate demand and expand production.”

Zimba said costs of production were further driven up by other non-production related costs farmers had to pay up because of being involved in farming business.

He said a review undertaken by ZNFU to understand the burden in agriculture revealed that farmers paid as much as 61 per cent in taxes when all forms of charges applied on farming were computed.

“We are grateful to President Rupiah Banda for abolishing crop levies which were penalising farmers even before they sell their products and some of the non-production related costs are council levies, environmental council charges, land rent, among others,” said Zimba. “These charges are continuously being revised upwards without due consideration of the impact they have on the competitiveness of agricultural products. It is for this reason that we are disappointed that in the 2010 budget, ground rent has been increased by 80 per cent in spite of the fact that hardly two years ago, it was revised upwards by more than 100 per cent.”

Labels: 2010 BUDGET, JERVIS ZIMBA, VAT, ZNFU

posted by MrK @ 4:05 AM