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Govt claim of middle income country status is insensitive – Kasanga

Govt claim of middle income country status is insensitive – Kasanga
By Fridah Zinyama
Mon 18 Oct. 2010, 18:50 CAT

GOVERNMENT’S revelation that Zambia will soon become a middle income country are insensitive as 70 per cent of the country’s population still live in abject poverty, a local economist has charged.

John Kasanga said it was surprising that finance minister Situmbeko Musokotwane told Parliament during the presentation of the 2011 budget that Zambia would in the next few years attain a middle income status when the country still ranked as one of the poorest countries in the world.

“Government should deal with the real issues of making the economy meaningful to its populous,” he said. “It’s not just a matter of saying that Zambia will become a middle income country...has the economy worked on reducing poverty for its people?”

And Kasanga said although the budget had a number of attractive fiscal features in it, it was overly dependent on Pay As You Earn (PAYE), adding that tax exemptions for constitutional office holders should be removed.

“Government’s over-dependence on PAYE is not good; it shows that government has failed to broaden the tax base,” he said. “I think that constitutional office holders should be made to pay tax also so that they contribute to the country’s coffers... Maybe it’s because they do not pay tax that they depend on it too much,” he said.

Kasanga further asked government to clearly explain whether the reduction in donor support was deliberate or not.

“Giving this explanation will help the public to understand whether Zambia is able to support most of its budget without much assistance from donors or not,” he said. “We are asking for an explanation because a reduction in donor support means government will have to find an alternative source of revenue...”

Kasanga further said ordinary people in business would be starved of finances if government sourced for the additional funds locally because the banking sector would concentrate on transacting with the government at the expense of the private sector.

“If the funds are to be sourced internationally, there are concerns of the public debt increasing,” he said.

Kasanga said the issue of the reduction in donor support would have to be explained to the public, as the implications on the economy were enormous. He further observed that government had made huge commitments to infrastructure development in next year’s budget.

“This move is not realistic as it will put too much pressure on government to source for funds to undertake these projects,” he observed. “This move also sends a message to the public that the infrastructure projects are meant to please the electorate next year.”

Kasanga said much as government intended to spend a lot of resources on infrastructure, the Mid Term Expenditure Framework did not include how government would maintain those structures after they were built.

“Is government going to train more doctors, nurses, teachers to meet increased demand in services once those structures are completed?” asked Kasanga.

Labels: 2011 BUDGET, DOMESTIC DEBT, JOHN KASANGA, MDGs, MINING, TAXATION

posted by MrK @ 4:45 AM