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Thursday, 7 June 2012

Is the grain levy the answer for council funding?

One of the ideas being pushed by Local Government Minister Nkandu Luo as a source of funding for local councils is the re-introduction of the "Grain Levy" which was abolished in 2009. The levy was a tax charged by on anyone transporting grain from one district to another. It was a tax on mobility.

Farmers are naturally not happy with Luo's intentions because of the potential negative effects it will have on the lives of the farmers. Many farmers argue that the grain levy will push the cost of production costs at a time that Zambia should be looking to expand its exports. Others argue that the real problem is what happens with the money. Crop levy funds will not in any way help the farming communities as these funds end up being misapplied and not accounted for properly. They bemoan more money leaving their pockets and mysteriously entering blackholes. The answer to that might be to ensure that such funds are used for local roads grading. 

The obvious problem with levy idea is that there are better alternatives which are more equitable. Perhaps Luo needs to suggest a range of measures and consult on them? One suspects she may not be entirely keen on the answers! The other answer the farmers may not like : abolish the current maize marketing system and divert the money being wasted on councils - assuming it can be properly ring fenced on roads and other critical infrastructure. Government would certainly find support from the World Bank who recently called for it to stop setting prices at which it buys maize from local farmers and allow the prices to be determined by the market to promote sustainable growth in the agriculture industry. It said, the "old policy has not resulted in significant reduction in rural poverty and job creation. This policy direction has also limited private sector investments in the agriculture sector".

1 comment:

  1. Centrally collected local income tax plus central government top up based on universal taxes(property/land rates/VAT/business rates), with provision for extra financial input for large infrastructure projects(rail/road/water). I admit it's not the most nuanced suggestion and based on accurate collection/payment of taxes, but you could see Lusaka&district deriving most of its budget from local income tax with less from the topup versus less populated Towns/areas. 2ngwee, apols for grammar


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