Local councils are increasing pressure on Government to reintroduce the grain / crop levy. Mkushi District Council says reintroducing the crop levy would "enable the council provide quality services to the people in the area".
The Institute of Local Government Administrators of Zambia (ILGAZ) agrees. It is calling on Government to reconsider bringing back the grain levy to "help broaden the revenue base especially for councils located in rural areas." (Source : The Post)
In 2012 the Local Government Minister at the time Nkandu Luo promised to re-introduce the levy as a source of funding for local councils. The levy was a tax charged by on anyone transporting crop/grain from one district to another. It was effectively a tax on mobility. It was abolished in 2009.
Re-introduction of grain levy is opposed by farmers because of the potential negative effects it will have on them. They argue that tax will push the cost of production costs at a time that Zambia should be looking to expand its exports and subsidies have been scaled down on maize.
Others argue that the real problem is what happens with the money. Crop levy funds in the past have not helped farming communities as these funds end up being misapplied and not accounted for properly. The answer may be to ensure that such funds are ringed fenced under a local roads funds. But auditing is a problem!
A better and more comprehensive and equitable solution should be explored. The Government should abolish the Constituency Development Funds which are wasting money. A better fiscal framework should be put in place. Let councils have proper fiscal and political decentralisation (with direct elected mayors). Let them spend the money they raise through local taxes. That is the long term solution.
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Chola Mukanga | Economist
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