Former Zambia Manufacturers Association Executive Director Maybin Nsupila has warned that Zambia would be in contravention of World Trade Organisation principles if it goes ahead to pass the Goods and Sales Tax Bill.
Mr Nsupila noted that the Goods and Sales Tax Bill goes against the National Treatment Principle of the World Trade Organisation.
He warned that Zambia’s trading partners will drag Zambia to the WTO if the country passes the Bill into Law.
“So we decide as a country to draft legislation which goes against our commitments at the World Organisation under the National Treatment Principle which says “Once a product has paid customs duties and enters your territory, it should be given the same treatment as the locally produced good”.
Mr Nsupila said the 16% and 9% Sales Tax rates go against this provision.
“Should the Bill become Law in this form, all our trading partners will take us on at the WTO on this one. We cannot escape,” he warned.
He further warned that the Bill if implemented into Law will seriously adversely affect the competitiveness of the local manufacturing industry.
Mr Nsupila said this is so because the vast majority of the inputs are imported.
“16% tax on inputs will kill the local industry. Although there is provision for goods to be exempted, there will be complications in administration as some goods can be both inputs and final. So producers will spend more time fighting with Ministry of Finance to have their inputs, intermediate goods, added to the list of exempted products,” he said.
“When you factor in 70% increase in the cost of electricity, more than 50% increase in user fees by agencies supporting industry, and other things, I fear for our economy and our diversification agenda. In the end, it’s viva trading and smuggling and hello to loss of manufacturing jobs and manufacturing capabilities,” he predicted.