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Monday, 9 September 2013

Should the crop levy return?

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.

Chola Mukanga | Economist
Copyright © Zambian Economist 2013

1 comment:

  1. problem with us Zambians is that we want to believe that everything hinges on having more money when really the reason why most institutions keep pushing for more money is only so that they have another source of money that they can abuse. People abuse public funds with no care at all and nobody is held accountable because everybody is protected by some one else in the higher office or they have formed a cartel. People have no moral obligation any more, they don't even care if they are caught or thrown out because since they have connections in every sector, another one of their corrupt colleague(s) will push for their re-employment no mater how public their case may have been covered. Infact, they even go on and get better jobs than the ones they previously had... what does that say about the people that threw them out of the previous company and those that have taken up their previous position. IT IS REALLY SAD. Zambians need to be held accountable, it reduces the job of an Auditor to ridicule and the investor unmotivated (local or foreign). It is also really sad when you hear an institution chief executive or any other senior manager being grilled for misappropriation offer no solution but just to say they are working on improving their internal process and they get away with it. How do you expect such a person to ever feel compelled to respect and care about the genuine growth of an organization. Executives give themselves immeasurable perks for doing nothing and adding no value to the organization, most of the time devaluing the organization further. Very few organizations have no genuine appreciation or support for executive performance bonuses because they can get much more just from the unwarranted perks


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