The latest national budget; A mixed bag of goods

The new budget, under the stewardship of a new finance minister, has been passed in parliament and it has both good and not-so-good sides. If we look at the strengths, a lot of emphasis has been placed on internal resource mobilisation. Although our past experience tells us that actual revenue collection has consistently fallen short against projected revenue collection. There is much consternation amongst business groups regarding the new VAT law and there is fear that it will bring further burden on businesses that the consumer will ultimately have to bear. Without addressing the inefficiencies of tax administration, there is pessimism that nothing substantial will happen in this area.

Expatriate workers will be given incentives to encourage them to send their earnings through formal channels which, if it works, will boost foreign reserves. The budget has focused on increased public investment by local and state enterprises. Yet, without curbing widespread graft, how much of that money will be well spent is in doubt. Details on how fresh employment for 30 million people will be achieved remain unclear. The budget also fails to give us any light on how to address the issue of non-performing loans (NPLs) that have risen to astronomical figures in the banking sector. We get no insight as to how the government intends to address this vital issue.

The current budget brings bad news for fixed-income groups who depend on savings tools as the rate of source tax on such instruments is set to double from five percent to 10 percent. The government has allowed for the white washing of black money once again but we ask the merit of this decision since it will discourage people to pay taxes, especially at a time when the government is placing huge emphasis on income tax collection. The price of gas has been hiked at various levels raising the fear of increase in transportation costs and putting greater pressure at household levels. In the final analysis of things, something needs to be done in the rate of utilisation of the ADP as it has become customary to spend the bulk of it in the closing months of the fiscal year, which does not benefit the people in any way and opens up the possibility of graft at various levels.