The economy performed very badly this year with Initial projections revised downwards from 5% t to 3,4%. Funding to help increase capacity in the manufacturing sector, which fell by 5% this year, is desperately needed.
The shrinking formal sector has resulted in more than 60 percent of the economy being informal –mostly of them unregistered, who do not pay taxes, thereby prejudicing the fiscus of much-needed revenue, given our narrow tax base.
The minister should be also vigilant enough to impose tariffs on cheap imports that are flooding the country and killing local companies trying to make the same products.
The rationale of this tariff protection would be to incubate local companies to grow and become competitive. However, to ensure that the privilege of tariff protection is not abused, it should be granted only to companies that have a concrete plan to become competitive and that can undertake to implement the plan within agreed timelines.
Although securitisation of some of our mineral resources to raise money has been criticized by others, I think the minister should pursue it anyway, given our state of economic desperation. Our economic renaissance cannot be domestic-led, given the low levels of liquidity in the country. We also cannot expect to get any foreign loans, given our high external debt and continued misguided policies on indigenisation.
Therefore, if we securitise we would be able to raise a reasonable amount of money to jumpstart the economy. For instance, we can sell a piece of land with diamonds underground worth $10 billion for $6 billion and use it to quench our thirsty economy. We cannot get this kind of money from anywhere else.
The minister should also use the budget to talk sense to those who are mulling salary increases for civil servants. Wage increases in the civil service will increase the cost of doing business and also eat up government revenue that could otherwise be loaned to productive sectors to increase capacity and create more jobs.
The new Income Tax Bill awaiting Presidential assent to become operational on 1 January 2014, should be stopped or amended before being implemented. Despite its merits, this new tax law, is flawed in that it seeks to place a further burden on those already paying taxes. It also plans to tax diaspora remittances – one of our major sources of revenue at the moment. Taxing the money sent home by 3 million citizens in the Diaspora will only discourage them from sending money through formal channels. The minister should seriously redress these anomalies in the Income Tax Bill, in order to promote sustainable economic growth.
The minister should also finance the acquisition of technology to mechanize our borders, in order to curb the interface of tax officials with importers. This will help stop the leakage from high levels of corruption and smuggling.
Even though our imports are growing, revenue from import duty is not commensurate with this growth, which can only point to intense corruption at the border.Post published in: News