Economic think tank in Africa’s second largest copper producer Zambia, urged the state to defer the proposed sales tax. Association President Dr. Haabazoka on the EAZ website proposed that government zero rate domestic Value Added Tax (VAT) for legal entities in the meantime but keep import Value Added Tax nonetheless.
Dr. Haabazoka further suggested the suspension of Import VAT refunds in a move that he believes will curb revenue leakages yet maintain collections from VAT to allow the state to move its budget targets.
“We should do everything possible to ensure that the currency depreciation does breach the K13 mark. On Friday 12 April the local unit settled at K12.5 sliding from K12.1 on Wednesday 10 April. Ideally the Kwacha trajectory in April is an appreciating one as mining entities upscale production and agriculture sector then exports their harvest among other factors,” he said.
Dr. Haabazoka said to avoid further speculation and adverse effects, it is advised that the bid – ask spread be widened to K0.5. This he said will cushion the markets from speculation risks. He also advised on the need to boost foreign exchange reserves by engaging businesses to help channel their foreign reserves into the country.
Dr Haabazoka who is also Head of the University of Zambia – Graduate Business School said the extractive industry should also be encouraged through the fiscal policy and other incentives to make Zambian banks primary holders of proceeds from the sale of mineral resources.
“There is also need to immediately restructure debt so as to make cash outflows match cash inflows. There should be cash flow matching to insure that funding gaps are plugged to hedge against liquidity challenges. The formula that can be used at national level should resemble one adopted by commercial banks,” Dr Haabazoka said.