MORE TAXES, HIGHER LIVING COSTS AND THE ECONOMICS OF DEEPENING POVERTY: THE CASE OF THE 2027 NATIONAL BUDGET 📊 THE PEOPLE’S ECONOMICS
The relentless augmentation of taxation in an economy already debilitated by widespread penury constitutes a perilous exercise in fiscal exaction. The 2027 National Budget proposes an additional K10.8 billion in net revenue measures, including an increase in Value Added Tax from 16% to 16.5%, higher mobile money levies, additional excise duties and a maximum PAYE marginal rate of 39.5%.
Such measures, superimposed upon an economy characterised by attenuated household purchasing power and constrained indigenous capital formation, threaten to exacerbate the material privations of ordinary citizens. The expansion of Treasury receipts cannot, in itself, constitute evidence of national economic advancement.
The magnitude of Zambia’s socioeconomic predicament is documented in the Zambia Statistics Agency’s 2022 Living Conditions Monitoring Survey. Approximately 60% of the population subsisted below the national poverty line, while 48% endured extreme poverty. The wealthiest 10% of households commanded 56% of aggregate household income, whereas the poorest half of the population received a paltry 7%.
This extraordinary asymmetry in income distribution reveals the precarious foundations of domestic demand. Additional consumption taxation, particularly where its incidence falls upon economically vulnerable households, risks compounding existing deprivation and further constricting the already diminished capacity for savings, investment and productive participation. Supporting such a budget is simply unpatriotic and an exposition of lack of concern for the millions of struggling households.
The proposed K284.8 billion expenditure framework allocates approximately K67.6 billion, nearly one quarter of the entire budget, to debt servicing, while agriculture, fisheries and livestock collectively receive approximately K22.7 billion. These appropriations illuminate the formidable encumbrance of accumulated indebtedness upon Zambia’s developmental aspirations.
The Government’s projected economic growth of 4.9% must consequently be interrogated against the substantive indices of national welfare like agricultural productivity, industrial expansion, remunerative employment, household purchasing power and measurable poverty reduction. Aggregate economic expansion, however statistically impressive, remains an inadequate surrogate for broadly distributed prosperity.
The proposed escalation of VAT and transaction levies introduces additional pressures into the economy’s price formation mechanisms. To the extent that enterprises transmit increased fiscal and compliance costs through their supply chains, consumers will encounter higher prices for affected goods and services. Increased mobile money charges may further diminish the transactional efficiency of households and small enterprises.
The cumulative consequences could include accelerated erosion of real disposable income, contraction of discretionary expenditure and diminished capacity for domestic capital accumulation. In an economy where a substantial proportion of the population already experiences severe material deprivation, such outcomes would be especially injurious.
Our country urgently requires a decisive departure from fiscal expedients that perpetually replenish the exchequer through successive impositions upon productive activity and household expenditure. A more sophisticated revenue dispensation must cultivate commercially remunerative state investments, broaden the productive corporate tax base, extinguish unwarranted fiscal concessions, suppress illicit financial flows and subject public expenditure to uncompromising scrutiny.
Economic policy must privilege industrial accretion, agricultural modernisation, indigenous entrepreneurship and the systematic enlargement of domestic purchasing power. Fiscal sustainability ultimately derives from the productive vitality of the national economy and the institutional probity with which its resources are administered.
The enduring indictment of an inequitable fiscal dispensation is the coexistence of expanding public revenue demands with persistent mass impoverishment. A Treasury may exhibit arithmetical improvement while the population experiences progressive economic attrition. The true distinction of national economic stewardship resides in transforming public finance into an instrument of productive abundance, distributive equity and enduring prosperity. Zambia’s citizens deserve an economy whose advancement is discernible in their livelihoods, rather than confined to the statistical proclamations of our state managers.
Saviour Chishimba
(Yehudah Ben David)
Principal & Founder
THE PEOPLE’S ACADEMY
Such write ups from an Opposition Alliance to the UPND Government sounds like parallel. Were there no better collaborations?