By JAMES KUNDA –
THE Zambia National Farmers Union (ZNFU) has said maize and its products should be zero rated for Value Added Tax (VAT) purposes to make the production of the staple food competitive and affordable to consumers.
In a submission towards the 2015 National Budget presented to Ministry of Finance, ZNFU says since the VAT status of maize changed from zero-rating to exempt, the food value chain suppliers have suffered the input VAT paid on production, thereby making the growing of maize and processing of its products expensive.
‘‘At a time when Government has eliminated all forms of subsidies on major inputs such as fuel, maize to millers and to farmers under Farmer Input Support Programme, VAT zero-rating maize would eliminate added costs on input taxes.
‘‘Alternatively, the Government should consider to vat zero-rate the inputs that are used in the production of maize and its products, which should include; seed, farming and milling equipment and grain bags among others,’’ ZNFU stated.
ZNFU stated that while this might lead to loss of Government revenue, it is important to recognise that the measure would unleash export competitiveness and trigger foreign earnings to the country, thereby contribute towards diversifying away from the dependence on copper.
Meanwhile, ZNFU has also urged Government to reduce the VAT charged on diesel to 10 per cent from the current 16 per cent to reduce the cost
of distributing the processed mealie-meal and flour to the remote parts of the country.
‘‘VAT reduction on diesel will result in Government loss of revenue but this will be offset by overall reduction in cost of production, increased investment in productive sector, create jobs and revenue for the government,’’ ZNFU said.
The farmers union also proposed that VAT on barley be zero-rated with a view to lowering the cost of production and improve the competitiveness in production of the commodity.
‘‘Barley is one of the products whose value addition is being done outside the country due to lack of investment in processing facilities.
By vat zero-rating barley like wheat, it will give incentive for investors to invest in local processing which will result in diversification of winter crops and export of malt, hence creating jobs and revenue for the Government,’’ ZNFU said.