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February 01, 2009

Zambia removes tax on agricultural equipment

by Jerry Munthali and Kasuba Mulenga

The Zambian government has zero-rated Value Added Tax for agricultural equipment and removed the windfall tax on copper. Presenting the 2009 national budget in Parliament yesterday, Minister of Finance and National Planning, Situmbeko Musokotwane also proposed to reduce customs duty on heavy fuel oil from 30 to 15 per cent.

The equipment covered under the zero-rating includes two wheel tractors and accessories, tractors up to 60 horse power, ploughs, harrows, disc harrows, planters, seeders, rippers, sub-soilers, cultivators and pump sets. These measures are meant to accelerate diversification and counter the global financial crisis. Musokotwane said Government had zero-rated value added tax (VAT) on windmills and maize dehullers to promote local capacity to manufacture the equipment. He said Government had observed the growing local capacity of manufacturers to produce windmills and maize dehullers. This measure would have minimal revenue impact.

Musokotwane proposed a 37 per cent increase in the allocation to the agricultural sector, providing K1.096 trillion from K800.5 trillion last year to boost development of the sector. He said Government considered the Fertiliser Support Programme (FSP) as an important tool in empowering small-scale farmers and ensuring national food security. Government has allocated K435 billion to the FSP this year with the hope that should prices of fertiliser remain low, many small-scale farmers would benefit.

The minister said Government was, however, concerned that the programme had a limited impact on increasing agricultural productivity. Considering that increasing productivity went beyond fertiliser provision but required enhanced extension services, Government has this year allocated K25.4 billion for procurement of motorbikes and bicycles.

A total of K12.3 billion will go towards construction and rehabilitation of camp houses for extension officers to improve their mobility and serve a larger part of the rural community.

Zambia would also like to develop a vibrant livestock industry.“To this end, an allocation of K70.7 billion has been allocated for livestock development this year, including the creation of at least one disease-free livestock zone,” Musokotwane said.

Zambia Daily Mail

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