The 2012 Zambian Budget making Zambia a better place for all
The 2012 Zambian budget, the first under the Patriotic Front and under President Michael C. Sata was delivered by finance minister Alexander B. Chikwanda, a veteran politician, on Friday, 11th November, 2011.
Here were the highlights in the 2012 Zambian budget:
The government proposed to spend K 27,698 trillion or 26.5 percent of GDP projected at K 104,462 billion. Of this amount K 19,976.0 billion or 72.1 percent will be financed from domestic revenues. K 1,894.4 billion or 6.8 percent will be financed by grants.
The balance or 21.1 percent of the total expenditure will be financed through domestic borrowing of K 1,324.3 billion or 1.3 percent of GDP and gross external financing of K 4,503.6 billion or 4.3 percent of GDP.
Macroeconomic Objectives in 2012
- Achieve real Growth Domestic Product of above 7 percent
- Attain end-year inflation of no more than 7.0 percent
- Limit overall fiscal deficit to 4.3 percent Of GDP
- Maintain gross international reserves of at least four months of import cover
Fiscal Policy Objectives in 2012
- Increase domestic revenues to 19 percent of GDP
- Limit domestic borrowing to 1.3 percent of GDP
- Limit net external borrowing to 3.0 percent Of GDP
- Commit at least 50 percent of the budget to social sectors and infrastructure development
The following were key tax changes in the 2012 Zambian budget:
- PAYE tax exemption was increased to K 2 million from K 1million.
- Income from K 2 million to K 2.8 million will be taxed at 25percent.
- Income from K 2.8 million to K 5.7 million will be taxed at 30 percent.
- Income above K 5.7 million will be taxed 35 percent.
The 16 percent value added tax (VAT) was not changed.
Corporate tax for banks was reduced from 40 percent down to 35 percent. The reduction in corporate tax would encourage the banks to lend more.
The corporate income tax applicable to the agriculture sector was lowered from 15 percent to 10 percent in order to spur investments and raise productivity.
The mineral royalty rate was increased to 6 percent from 3 percent and 5 percent for base metals, respectively.
Export duty on export of copper and concentrate was reduced from 15 percent to 10 percent, but also was extended to all unprocessed or semi-processed mineral ores.
The customs and exercise duty will take effect on 1st January 2012 whereas the proposed PAYE System will take effect on 1st April 2012.
The allocation was increased by 37.9 percent to K 1,231.6 billion in 2011. Of this amount K 500 billion was for Famer Input Support Programme and K300.0 billion for crop purchases for the strategic food reserve. The balance will cater for irrigation infrastructure, livestock development, fisheries, and other programmes.
Education and Skills Development
The allocation was increased by 26.7 percent to K 4,850.5 billion. K 796.4 billion was set aside for various infrastructure projects such as construction of 2,000 additional class room blocks.
K 126.0 billion was provided to upgrade Chalimbana and Palabana colleges into universities and construct a new university at Lubwa mission. The government will also recruit 5,000 teachers, construct 9 and rehabilitate 12 Technical Training Institutes.
A provision of K 77.9 billion was made for the recruitment of 2,500 front line medical personnel, K 389.3 billion for infrastructure and medical equipment. 8 district hospitals will be completed and 5 new district hospitals will be constructed.
The government will abolish all user fees for primary care services not only in rural but also in urban areas.
Local Government and Housing Development
Grants were increased to councils by more than 100 percent to K 257.1 billion. This was for rehabilitation of 850 and construction of about 3,000 boreholes in rural areas.
Over view/comments on 2012 Zambian budget
The Zambia Institute of Chartered Accountants (ZICA) chairperson for education and training, Kalaluka Nambayo said the 2012 budget was in line with the PF manifesto.
And the Economics Association of Zambia (EAZ) said the 2012 Zambian budget if correctly implemented was going to put more money in peoples pockets.
Meanwhile, the opposition Parliamentary chief whip, Felix Mutati said the exempt threshold which was doubled to K 2 million would only benefit a narrow group.
We have increased the exempt potion but by increasing only the exempt potion, without aggressively dealing with the bands, we have only removed 80,000 of the tax payers from the brackets against close to a million people. The benefit is to a narrow group rather than to a wider population
However, Mutati also said:
It is a sensible budget and answers some of the questions of the people of Zambia but the majority of the questions still remain unanswered.
Other Related Pages
The 2011 Zambian Budget
The 2010 Zambian Budget
2012 Zambian Budget To Economy Of Zambia
2012 Zambia Budget To Zambia Advisor Home
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