Wednesday, 9^th December, 2020

The House met at 1430 hours

[MR SPEAKER in the Chair]

NATIONAL ANTHEM

  PRAYER

_______

BILLS

SECOND READING

THE ZAMBIA REVENUE AUTHORITY (Amendment) BILL, 2020

The Minister of Finance (Dr Ng’andu): Mr Speaker, with leave of the House, I wish to defer the Bill to a later date.

I thank you, Sir.

Question put and agreed to. Leave granted.

The debate on the Bill, by leave, accordingly deferred.

THE INCOME TAX (Amendment) BILL, 2020

The Minister of Finance (Dr Ng’andu): Mr Speaker, I beg to move that the Bill be now read a second time.

Mr Speaker, the Bill before this House is principally seeking to amend the Income Tax Act so as to:

1. increase the Pay As You Earn (PAYE) tax free threshold for individuals to K48,000 per annum;

      b. increase the amount allowed as deduction for employing a person with disability to K2,000 per annum 

         from K1,000 per annum;

      c. increase the tax credit for persons with disabilities to K6,000 per annum from the K3,000 per annum;

      d. reduce the income tax rate to 15 per cent on income earned by persons providing accommodation and

          food services;

      e. reintroduce a local content allowance for utilisation of selected local raw materials to encourage local

         content, value addition and agro-processing;

      f. increase the number of years for claiming development allowance to five years from three years on

         expenditure incurred on the growing of rose flower, tea, coffee, banana plant, citrus fruit trees or other 

         similar plants or trees;

      g. increase the tax rate on betting to 25 per cent of gross takings from 10 per cent of gross takings;

      h. provide for the imposition of withholding tax on payments made by a resident company in the republic to a

         non-resident company in respect of realty financing;

      i.  provide for the mandatory maintenance of books of accounts in Zambian Kwacha; and

      j.  provide for matters connected with or incidental to the foregoing.

Mr Speaker, this Bill is straight forward and I commend it to the House.

Mr Speaker, I beg to move.

Mr Simfukwe (Mbala): Mr Speaker, thank you for the opportunity to debate the Income Tax (Amendment) Bill, 2020 and to present the Report of the Budget Committee on the Bill. As the House is aware, the Bill was referred to the Budget Committee for scrutiny, in line with the provisions of the Standing Orders.

Sir, having interacted with various stakeholders regarding the Bill, your Committee fully supports the Bill as its enactment will enhance domestic revenue mobilisation and actualise the policy pronouncements contained in the 2021 Budget Address.

Mr Speaker, all stakeholders who appeared before your Committee supported the Bill and were optimistic that the measures introduced via this Bill will undoubtedly resolve some of the challenges that have been faced by the various players in the economy. Since the hon. Members are privy to the contents of the report, I will only highlight three key issues contained therein.

Sir, under Clause 6, your Committee supports the proposed introduction of a local content allowance at the rate of 2 per cent to encourage value addition to products such as mangoes, pineapples and cassava. However, it is of the considered view that limiting the incentive to these few products may negatively affect the outcomes. In this regard, your Committee strongly recommends that the clause be amended and broadened to include other agro-processing players across all subsectors.

Mr Speaker, your Committee welcomes the amendment under Clause 10, which seeks to amend Section 55(4) of the Income Tax Act to provide for the mandatory keeping of all books of accounts in Zambian Kwacha as it will go a long way in promoting the use of the local legal tender in domestic transactions. It will also discourage the unwarranted use of foreign exchange with its attendant negative consequences on the foreign exchange rate. Your Committee contends that corresponding measures to ensure strict adherence are needed to ensure compliance. Further, your Committee urges the Executive to ensure that the clause is more specific on whether or not it prohibits invoicing for goods and services in foreign currency, considering that an invoice forms part of the accounting records.

Sir, lastly, but not the least, on Clause 15(c), your Committee is cognisant of the fact that the tourism sector is the worst affected sector by the Coronavirus Disease 2019 (COVID-19) pandemic and, therefore, strongly supports the measures taken to reduce the corporate income tax rate on income earned by hotels and lodges on accommodation and food services from 35 to 15 per cent.

Mr Speaker, in this vein, your Committee urges the Executive to also consider stepping up the measures by ensuring that the Tourism Levy is also reduced on services such as accommodation, conference, food and beverages so as to reduce the cost of tourism services.

Sir, I wish to conclude by thanking all the witnesses that appeared before your Committee for their invaluable input into its work. I also wish to thank you, Mr Speaker, and the Clerk of the National Assembly for the guidance and support rendered to your Committee throughout its deliberations.

I thank you, Sir.

Mr Ngulube (Kabwe Central): Mr Speaker, thank you for according me this opportunity to add my voice to the debate on several proposed amendments to the Income Tax Act and all the Bills that have been presented or the ones that are being read for the second time.

Sir, I want to thank His Excellency the President of Zambia for having listened to the submissions made by various stakeholders following the Coronavirus Disease 2019 (COVID-19) outbreak. We are aware that this hardworking Patriotic Front (PF) Government has actually been ahead of everyone making sure that it affords all traders, including manufacturers, the relief that they need.

Mr Speaker, this is the first time since Independence that the Government is actually siding with manufacturers to introduce local content benefits for people that are producing local produce such as mangoes and jam.

Mr Speaker, I want to speak on behalf our people in Kabwe Central where we have a factory that produces jam and mangoes and processes almost everything. They are excited that the Government has actually listened to their cries.

Mr Speaker, while we talk about the economy and the adverse effects of COVID-19, we are cognisant of the fact that our people require debt relief. Our people need tax relief and a lot of interventions by this hardworking Government. So, we want to support the President and say that when he gave his Speech in Parliament, we were excited because we knew that 2021 will be a very different year. It will be exciting for all of us.

Mr Speaker, we are aware that those who are running hotels and lodges, whose businesses have been closed for a very long time due to COVID-19, will now not worry about tax at 35 per cent. They now will not worry about where they are going to get the monies to fill up the tax void because taxes have now been reduced from 35 to 15 per cent.

Mr Speaker, let me end my debate by also thanking his Excellency the President, through the hon. Minister of Finance, for also introducing a relief to the people who are actually paying Pay as You Earn (PAYE). You know, the tax band increment from approximately K3000 to K4000 will help many people because the dollar has gone up. So, prices of a lot of things have shot up. So, we want to commend the President and the hon. Minister of Finance. We are saying to the hon. Minister of Finance that he should, please, continue giving relief to our people inaudible because this hardworking Government is the only Government that has been reducing taxes ever since it took over power.

Sir, while other countries are increasing their tax bands, Zambia is giving people more tax relief. Allow me, again, to thank the hon. Minister of Finance, and more sincerely, for also considering our people who are involved in agricultural exports. The biggest component that actually gets to be considered in our exports is the income tax band. When you want to export, before your produce reaches the border, you have to start scratching your head wondering how to deal with the Zambia Revenue Authority (ZRA), the transporter, the shipment and so on and so forth. However, now that the hon. Minister has reduced these taxes, it will now be easy for us, exporters, to begin to export without having our headaches.

Mr Speaker, with those few remarks, I want to thank you, most sincerely, and may God bless, protect and keep you away from the evils of Satan.

I thank you, Sir. 

Ms Kasune (Keembe): Mr Speaker, I thank you. Wow, those accolades from Kabwe there were very interesting.  I want to add the voice of the people of Keembe and, indeed, my own to the debate, as we look at the Bill on the Floor, the Income Tax (Amendment) Bill.

Mr Speaker, the move by the hon. Minister of Finance to ensure that some of the tax amendments being made actually benefit the local people of Zambia is welcome. It is important to acknowledge that, as a country, and for the longest time, most incentives were being given to foreigners and this has actually disadvantaged many of our local players who are our own people.

Sir, I think it is important to note the recommendation from the Chairperson of your Committee that this should be extended not only to the products the hon. Minister talked about but, indeed, to the many other products that are within the country of Zambia not only for the sake of the local manufacturing that is being done here, but, hopefully, that there will be a trickling down also as we try to look at exporting.

Mr Speaker, it is important to note that though we have so many resources, for manufacturers trading in local produce within Zambia, packaging and transport takes much of the little profits that they usually seek. So, these tax amendments are very critical.

 Sir, allow me also to add, as I support the Bill on the Floor, that though the hon. Minister has reduced the tax rate for people in tourism from 35 to 15 per cent, it is important, again, as the Chairperson mentioned, to note that there are so many things that are factored into tourism, some of them being, of course, the food itself and transportation, which is really not helping our country. You find that Zambia has a lot to offer, but many people would rather go to other countries, as used to happen even before the Coronavirus Disease 2019 (COVID-19) because of the many other incentives that are actually given. Countries such as Zimbabwe and South Africa benefit from this, yet we sit at the centre.

Mr Speaker, people have begun to say that being landlocked is not a problem, but finding opportunities because of our strategic position. I think it is very critical that we go even beyond the 15 per cent that the hon. Minister of Finance has offered. What are some of the other things that can also be given incentives so that our tourism can improve?

Sir, I think part of the conversation in this year has been around how we can also encourage Zambians to become tourists within their own country. We know that the country is endowed with a lot of natural resources but these are not enjoyed by the local people because salaries are low. Many Zambians are struggling to pay schools and to just make ends meet. I have always referred to the reality today that cooking oil and sugar are very expensive. Therefore, you can imagine that people do not have the luxury of thinking of going to Livingstone or local waterfalls which are so beautiful in their virgin capacity.

Mr Speaker, since the country is haemorrhaging financially, we will need to do more than what has been put on the table. Even the tax amendment, which the hon. Minister of Finance has given of K4,000, is very little because you do know very well that when we came to Parliament, the Dollar rate was K10 to US$1, but now it is about K21 to US$1. That is a big difference. So, some of these incentives may not be felt. They may look good on paper but when you actually actualise them, it will not be felt by ordinary Zambians. So, my hope and prayer is that even as you think of these amendments going forward, create a bigger base of about K5,000 or K6,000 because people are really struggling in this country and it is no longer a hidden secret.

I thank you, Mr Speaker.

Hon. UPND Members: Hear, hear!

Dr Ng’ambi (Chifubu): Mr Speaker, I thank you for the opportunity to express our gratitude, as people of Chifubu Constituency. As Member of Parliament for Chifubu, I would like to express my gratitude to His Excellency the President, Mr Edgar Chagwa Lungu, for the manner in which he has handled the economic impact of the Coronavirus Disease 2019 (COVID-19).

Mr Speaker, first of all, it is noted that President Lungu has ensured that the economy of Zambia is insulated. President Lungu has responded to the cries of the manufacturing and the tourism sectors by providing relief.

Mr Speaker, despite going through the debt crisis, the Cabinet of the Republic of Zambia, under the leadership of President Edgar Chagwa Lungu, has taken a step further by providing this tax relief to the country. Indeed, this is the way leadership is supposed to be.

Mr Speaker, it must be known that, over the years, manufacturing has suffered and lamented undue competition, especially from countries such as South Africa. However, with this intervention of the Government, we want to see manufacturers competing favourably with other manufacturers in the region. This, indeed, is going to provide an opportunity for our manufacturing industries to export some of the products that are going to be manufactured in Zambia, bearing in mind that this tax relief is beyond what is paid to the Zambia Revenue Authority (ZRA). It is going to provide an opportunity for companies to retain part of their income in order for them to invest in expansion of their businesses. It is going to provide a window for these companies to be able to improve on he quality of their products.

Mr Speaker, on tourism, I think we should be able to start competing with any other country in the region, bearing in mind that at this point, the tourism industry is the most hit in terms of the effects of COVID-19. I must say that the President, who has been listening to the cries of the people, has been in a position to manage the impact effectively. Indeed, I want to commend the leadership of the Patriotic Front (PF) for these interventions. Needless to say, once these decisions take effect, they should be able to create opportunities for companies to employ more people and this is going to have a very favourable response towards youth unemployment.

Mr Speaker, with those few words, I want to thank you and commend the hon. Minister of Finance for a job well done. I also want to encourage him to remain focused so that the PF Government transforms the economy of this country just as it has transformed the infrastructure development. The economy of Zambia lies in the hands of the hon. Minister of Finance and His Excellency President Edgar Chagwa Lungu.

Mr Speaker, I am happy that the economy, with the interventions that the President has put in place by refusing and resisting a total lockdown, has started showing signs of improvement. I believe that giving it another six months, Zambia shall never be the same. Opportunities for employment will be created for young entrepreneurs. Indeed, this intervention is a job well done.

Sir, with these few words, I want to thank the hon. Minister and wish the people of Zambia a merry Christmas and a prosperous 2021.

I thank you, Mr Speaker.

Dr Ng’andu: Mr Speaker, I would like to firstly thank the Budget Committee and the hon. Members of this House for supporting the Bill.

Sir, I also wish to take note of the observations made by your Committee as well as issues raised by hon. Members of Parliament, such as those relating to the implementation of the local content provision. I would like to just respond to a number of specific comments that have been raised in the Report as well as in this House.

Mr Speaker, one such concern is that the incentives that we have provided to give relief to the tourism industry, in particular, are insufficient. I need to say that the provision of relief to companies so that they are able to ride the wave of the Coronavirus Disease-19 (COVID-19) pandemic must be weighed against the need for us to raise sufficient revenue to be able to finance the various expenditure areas that we have in the budget. So, it is really an attempt to strike some balance between giving relief to companies as well as raising sufficient revenue to support our activities going into next year.

Mr Speaker, one of the objectives of the Bill before this House is to empower the Commissioner General to request a person to furnish the authority with information despite the record being outside the Republic or held by a person who is not a resident of the Republic. The proposed amendment is aimed at curbing transfer pricing. I would like to submit to this House that globally there is an increase in cross border trade, which has come with both positive and negative aspects. One of the negative aspects is that of transfer pricing which is one of the schemes being employed by many multinational companies to evade tax. This does not just apply to Zambia, but also to a many other countries, particularly those within the third world.

Mr Speaker, the way the current provision sits, there is no limitation on where information can be sourced. Therefore, I wish to state that the proposal is not to change the current law, per se, but to enhance the law with regards to provision of information as, currently, the Income Tax Act (Amendment) Bill No. 20 of 2020 does not explicitly require persons that may be outside the Republic to provide information.

Sir, I believe it is every member of this society’s constitutional duty to pay their fair share of tax. This Bill is also fairly straightforward and I recommend it to the House.

Mr Speaker, I beg to move.

Question put and agreed to and the Bill read a second time.

Committed to a committee of the Whole House.

Committee on Thursday, 10^th December, 2020.

THE CUSTOMS AND EXCISE (Amendment) BILL, 2020

Dr Ng’andu: Mr Speaker, the Bill before this House is principally seeking to amend the customs and exercise Act so as to provide for:

1. reduce the customs duty on selected agricultural equipment and inputs;
2. increase the customs duty on selected agriculture products;
3. provide for a deduction mechanism for excise duty paid on airtime by service providers;
4. provide for a time frame for pr-clearance for imported goods through a customs aerodrome;
5. remove customs duty on copper ores and concentrates;
6. introduce selected good surtax on imported ethyl alcohol;
7. introduce excise duty on reconstituted milk; and
8. provide for matters connected with, or incidental to, the foregoing.

Sir, this Bill is straight forward and I recommend it to the House.

Sir, I beg to move.

Mr Simfukwe: Mr Speaker, in accordance with its terms of reference, as provided for in the Standing Orders. The Committee was tasked to scrutinise the Customs and Excise (Amendment) Bill No. 21 of 2020.

Sir, the Customs and Excise (Amendment) Bill, 2020, seeks to amend the Customs and Excise Act, Cap 322 the Laws of Zambia so as to, among other things, bring into effect some of the Government’s pronouncements in the 2021 Budget Address on customs and exercise duties.

Mr Speaker, all stakeholders who appeared before your Committee supported the Bill, save for a few concerns which your Committee has highlighted in its Report.

Mr Speaker, allow me to briefly highlight some of the issues that emanated from your Committee’s interactions with stakeholders. From the outset, let me inform this august House that your Committee raises serious concern over the revenue targets for the 2021 Financial Year, especially that an anticipated 70 per cent of the domestic revenue is due to be channelled towards debt servicing. The high domestic and foreign debt leaves no option but further accumulation of more debt. Your Committee strongly urges the Executive to ensure that the announced economic recovery plan is implemented on 1^st January, 2021 without any delay so as to address the short to medium-term macroeconomic fundamentals which have deteriorated immensely.

Sir, let me now highlight two specific issues that caught the attention of your Committee regarding the Bill. Under Clause 6, your Committee notes that where as the introduction of selected goods surtax on imported ethyl alcohol is progressive, the use of a surtax as a protectionist measure to promote domestic production exposes the country to the risk of retaliation from other countries. It is the considered view of your Committee that the Executive exploits other options such as the use of trade remedies and other appropriate instruments at its disposal to build domestic production capacity and the competiveness of local producers.

Mr Speaker, with regard to Clause 13, your Committee notes with concern that while the proposed adjustment of customs duty from 25 per cent to 40 per cent has a potential to support the competitiveness of local farmers as well as promote import substitution, the increase in customs duty on meat and fish products could pose a risk to consumer welfare, especially that Zambia’s beef and fish production still falls short of domestic demand. Therefore, your Committee recommends that the customs duty on fish and beef products be gradual and kept in abeyance until the local production is able to meet domestic demand.

Mr Speaker, before I conclude, let me place on record that your Committee is concerned that the hon. Minister of Finance has not made good on the undertaking made in his 2021 Budget Address to reduce the investment threshold for a Zambian citizen to qualify for tax incentives under the Zambia Development Act No.11 of 2006, from US$500, 000 to US$100,000, for those intending to invest in a priority sector, a multi-facility economic zone or industrial park. Your Committee notes that the legislation to give effect to this pronouncement has not been tabled before the National Assembly. Your Committee urges the Executive, as a matter of extreme urgency, to ensure that the necessary amendments are tabled before the House at the earliest opportunity.

Mr Speaker, in conclusion, allow me to render my sincere gratuity to you and the Clerk of the National Assembly for the guidance and the support accorded to your Committee throughout its deliberations. Gratitude also goes to all the stakeholders who appeared before your Committee.

I thank you, Mr Speaker.

Mr Kampampi: On a point of order, Sir.

Mr Ngulube: Mr Speaker, thank you for, once again, giving me this opportunity –

Mr Speaker: A point of order is raised.

(Inaudible)

Mr Speaker: Is it misadventure? It appears hon. Member for Mwansabombwe is having difficulties connecting.

(Inaudible)

Mr Speaker: I am afraid we have to move on.

Mr Ngulube: Mr Speaker, thank you, once again, for giving me this opportunity to add my voice to the debate in support of the proposals to amend the Act on the Floor.

Mr Speaker, very briefly, I want to state that it is important that Zambia continues to reform its tax administration and its laws to suit what is happening in the region and across the world.

Mr Speaker, it was almost illegal in Zambia for anyone to go to the Zambia Revenue Authority (ZRA) to pre-clear goods by saying, “I have a container coming and I would like to have it assessed in advance and pay”. However, now, the pre-clearance of goods gives an opportunity to look for money, plan, budget, and also to make sure that the correct taxes are paid.

Sir, sometimes, we have many problems with the clearance of our goods because it is either there will be congestion at the border or other problems could arise, such as the invoice not being cleared. Therefore, sometimes, you would find that you after fourteen days, you start paying penalties. Now that the Law is being amended it will easy for all of us importers to conduct a pre- clearance of our goods and to pay the correct taxes. There will be no tax evasion because people will be able to look for money and will be able to pay in good time.

Mr Speaker, I would like to commend the Patriotic Front (PF) Government for this very noble gesture and for having listened to the cries of several stakeholders in the industry.

Mr Speaker, as I conclude my debate, allow me to thank the hon. Minister of Finance for highlighting many amendments, like the surtax that the Chairperson of the Committee mentioned. The Government must respond to the economy or the economy must dictate what the Government should do. At the moment, every country wants to protect its manufacturers and domestic revenue. So, the Patriotic Front (PF) Government is on the right track in ensuring that all the taxes that are being passed are in line with what the market is dictating.

Mr Speaker, we are aware that many cartels are normally formed with a view to either evade taxes or dictate how taxes should be paid. Therefore, the new changes and the powers that are being given to the Commissioner-General will enable the Government to discover how much the taxpayers are actually supposed to pay. We are aware that mining companies and some conglomerates hide in the name of taxes not being properly accounted for because either the monies are kept abroad or the documentation is not found.

Mr Speaker, may God bless you and protect you from the evils of satan.

I thank you, Mr Speaker.

Mr Speaker: Hon. Member for Kabwe Central, remove the last sentence from your submission.

Mr Ngulube: Mr Speaker, allow me to withdraw the last phrase from my debate.

Mr Speaker: Very well.

Mr Mwiimbu (Monze Central): Mr Speaker, thank you for allowing me to debate the Bill that has been ably moved by the hon. Minister of Finance, which is under consideration. Since I did not have the opportunity, I also thank the hon. Minister for the other Bills which he moved earlier.

Mr Speaker, I would like to state that countries the world over thrive on taxes. It is important that taxes are fair to enable people to pay the requisite taxes. I have taken note that the hon. Minister of Finance has made some proposals to reduce taxes and provide incentives. It is trite to state that despite the hon. Minister of Finance giving the business community and any other player in the industry incentives, the benefits will not accrue to the majority of Zambians. Most Zambians are not able to enjoy the benefits that are being offered, considering that the economy has crumbled. Most small-scale traders and businessmen, currently, in the country have closed their business houses and are no longer trading. So, when coming up with the incentives, I expected the hon. Minister of Finance to consider the businesses that have closed, so they could be revived. Unfortunately, most shops at shopping malls in Lusaka that were being managed by Zambians closed are no longer operational.

Mr Speaker, I have no doubt in my mind that due to the Coronavirus Disease 2019 (COVID-19) rules that were applied, most people who were running bars and restaurants closed their businesses. The majority of the workers who worked under these lines of business were laid off. So, for me, the incentives that are being provided by the hon. Minister of Finance will not accrue to them. We must find another way of coming up with a stimulus to ensure that the businesses that were closed are revived so that small-scale entrepreneurs can re-engage the employees who were laid off.

Mr Speaker, you may not be aware that many people in the business sector have been laid off, and there has been no assistance from the Government. I would like the hon. Minister to think through this matter and ensure that assistance is given to the people who no longer work or were laid off. The tax incentives on revenue will not affect the workers who were laid off because they do not have any income that is worth talking about.

Mr Speaker, I was surprised to hear my hon. Colleagues praise the measures that have been put in place, as if come 1^st January when all the measures come into effect, the economy will be back on track, employees will be re-employed, and businesses will thrive. Businesses can only thrive if there is income that is generated and if there is a financing arrangement to regenerate them. I have no doubt in my mind that as long as the Zambians whom we are targeting do not have the money to enable them to enjoy the measures that have been put in place, these measures will merely be academic.

Mr Speaker, as we discuss the issue of tax, the provision of services is not supposed to be selective. People pay tax, and when they do, they expect a corresponding service from the Government of the day. The business community and the members of the public will be discouraged if they see that the services that are generated from the taxes that are paid are segregatory.

Mr Speaker, we have raised pertinent issues on the Floor of this House pertaining to the issuance of National Registration Cards (NRCs), and we were told that there is no money, yet in other areas, this service of NRC issuance is taking place. The revenue that enables the Ministry of Home Affairs to issue NRCs in other areas comes from all of us. I expect that when people pay taxes, there should not be any segregation.

Mr Speaker, I demand that the Ministry of Finance finds money to finance the Ministry of Home Affairs so that the issuance of NRCs takes place. When the money is provided, and the people see this service, they will willingly pay taxes. However, if they see that they are being segregated, they will start avoiding paying taxes to the Government, and the Government will suffer. So, I call upon the hon. Minister of Finance to release money so that the issuance of NRCs takes place in the Western Province, the Southern Province, Central Province and parts of Lusaka Province.

Today, we have noted that the Electoral Commission of Zambia (ECZ) has announced that the issuance of NRCs will take place in all prison cantonments in this country, despite being assured that there is no money. Where has the money to issue NRCs to the people in prisons come from at the segregation of the people in the Western Province and other areas?

Mr Ng’onga: On a point of order, Mr Speaker.

Mr Speaker: Hon. Member for Kaputa, my equipment is working and I have seen your point of order. You are now interjecting. Do you want the hon. Leader of the Opposition to stop debating so that we attend to you? My gadget is working.

Hon. Member for Monze Central, you may continue.

Mr Mwiimbu: Mr Speaker, thank you for that timely intervention.

Mr Speaker, my point is that when people pay taxes to the Government of the day, they expect services to be provided. So, in the same vein that the hon. Minister of Finance has found money to issue NRCs to prisoners, let him find money so that the people of the Western Province, the Southern Province, Lusaka Province and Central Province can also access NRCs because they are supposed to derive that service when they pay taxes.

Mr Speaker, the other issue which I would like to bring to your attention is the unfortunate situation that happened in Monze yesterday. The business community, which is supposed to pay taxes –

Mr Ng’onga: On a point of order, Mr Speaker.

Mr Speaker: A point of order is raised.

Mr Ng’onga: Mr Speaker, thank you for allowing me to raise this point of order now. Earlier, I rose on a point of order on the hon. Member on the Floor.

Mr Speaker, one of the pertinent issues, as we debate Motions or whatever issues in Parliament, is that of relevance as we speak. The business on the Floor is on the Bill, whose objects have been spelt out by the hon. Minister of Finance. However, even when we have the objects of the Bill spelt out, we have seen the seasoned hon. Leader of the Opposition debating on other issues, including the registration of voters, yet the Bill is straightforward and seeks the support of this House, and all of us have this Bill before us. Is the hon. Leader of the Opposition in order to use this opportunity to debate any other issue, yet the Bill we are considering is straightforward and needs our support? I need your serious ruling.

Mr Speaker: Whether something is straightforward or not is a matter of individual conception. What may be straightforward to you may not be to another person. The point the hon. Leader of the Opposition is trying to make is that, as we raise taxes, we must also consider the reason we raise them. There are theories around compliance. There are measures that promote compliance and which do not.

Interruptions

Mr Speaker: Just a minute, hon. Members.

As a matter of fact, one of the basic and fundamental tenets on the Floor of the House is the freedom of expression. If you have a different view, which you may be entitled to, just indicate to debate. If you want to challenge your colleague’s view point, you may, again, indicate. If you feel he is off tangent, you may, again, indicate. However, whilst your colleague is debating and even after indicating on the gadget, you virtually want to stop debate, we stop and keep quiet. The short ruling is that the hon. Member is not out of order.

Hon. Member for Monze Central, you may continue.

Mr Mwiimbu: Mr Speaker, thank you for that noble ruling.

Mr Speaker, I was about to tell the nation and this House about the unfortunate scenario that obtained in Monze yesterday, where hordes of paramilitary and police officers went to town and started firing live ammunition in public. As a result, businesses that are supposed to generate income for the people of this country were disturbed.

Mr Speaker: Hon. Leader of the Opposition, do not stretch issues. Just get to the point. You want to raise an issue, bring it to the notice and then try to connect it to tax. I am following. I have given you the freedom, but that does not mean that you must use it as an omnibus to bring in anything and everything and, then, make very tenuous connections with taxation. That is equally not acceptable.

You may continue.

Mr Mwiimbu: Mr Speaker, the people of Monze are willing to pay taxes to the Government of the Republic of Zambia, but if they are not able to trade as a result of fear that the Government is instilling in them, taxes will not be collected in Monze. So, I am appealing to the Government of the day to ensure that the traders and the people of Monze trade peacefully so that they can pay taxes to it.

I thank you, Mr Speaker.

The Minister of Tourism and Arts (Mr Chitotela): Mr Speaker, I thank you for giving me the opportunity to support the Bills moved by the hon. Minister of Finance.

Mr Speaker, Zambia needs to promote its own businesses in order for it to generate taxes. As citizens, we need to support the hon. Minister of Finance, as he brings progressive Bills that encourage production so that we can be sustainable and raise enough money to provide for social services.

Mr Speaker, the issuance of National Registration Cards (NRCs) requires financial support. When every citizen is given an equal opportunity and an equal number of machines are in all the ten provinces, you cannot blame your friends who invested in mobilisation and encouraged people to go and obtain NRCs during the same period, using the same equipment and finances, released by the Treasury, from taxes. Their inability to organise people cannot be blamed on others. We must be able to take responsibility when the hon. Minister of Finance releases money for us to offer social economic services in our regions. As representatives of the people, we have a duty to represent them squarely and equally, and to encourage them to participate in social and economic activities. As hon. Members of Parliament and elected leaders, it will not do us any good to come here and politic when we are required to go and encourage our citizens to participate in economic activities for social wellbeing. Instead, some of us choose to go and dance ndombolo ya solo somewhere and then when we are late –

Mr Speaker: What language are you now using?

Mr Chitotela: Mr Speaker, it is the title of a song sung by a Congolese. Some people went to dance somewhere and they are now blaming the Treasury for not releasing the money collected from taxes. We must be responsible. Therefore, we need to encourage our citizens to participate in economic activities.

Mr Speaker, I have listened to the debates on various allocations and there was no province that was favoured with more money or machines. All provinces were given equal treatment. Other people took the responsibility to encourage their citizens to participate in economic activities. If we chose to stay in Lusaka and expected other people to do that for us, then, we must blame ourselves. We cannot blame the referee or the player. I cannot hate the game. Instead, I need to look at things and agree that, yes, I failed the people and not pass on my failure for not doing the right thing to other people who are innocent.

Mr Speaker, right now, all the provinces have been given the same machinery and human resource for voter registration. Some people are here in Lusaka while others are mobilising their people. If your friends mobilise more people to register as voters, are you going to blame the hon. Minister of Finance that he did not give you the money? Are you, then, going to ask that the exercise be extended and that the hon. Minister of Finance provides more money to enable you to mobilise the people to register as voters. No, we need to take responsibility. Therefore, Taxes are key because the Government needs to raise money for it to pay for medical services, education facilities and provide the social services required by its citizens.

Mr Speaker, one professor said:

    “Population increases by multiplication while social services increase by addition.”

Therefore, the Government needs to invest more in production so that it is able to meet the needs of the people. That is the responsibility we, as leaders, have been given. It is incumbent upon us to provide that which is required by our people. We, therefore have a duty to encourage people to participate in both social and economic activities and not just to politick here and create an impression that the Government does not care about a certain region of the country. The Government cares. Those of us who are elected have a responsibility to encourage people from our regions to participate in economic activities.

I thank you, Mr Speaker.

Mr Speaker: Hon. Members, I know that this question of voter registration is, currently, very topical and very emotive, but let us not degenerate this particular debate. If this trend continues, then we will move on. I know where this subject is sitting. I have been here. Since September, so many ministerial statements have been brought on the Floor of the House, yet there is no satisfaction. So, now, an avenue has been seen or perceived, and we want to exploit it, yet the hon. Minister of Finance has come with some measures directing the economy but you want to sway and reopen what we could not do yesterday, you want to do today, even in the absence of the hon. Minister of Home Affairs. You want to shift the burden on to the hon. Minister of Finance now.

Mr Nkombo (Mazabuka Central): Mr Speaker, I am grateful for this opportunity. I am also grateful to the hon. Minister of Finance for the measures, which in my view, are all supposed to put a smile on our faces, if they achieve the intended objectives.

Mr Speaker, as we enter the newyear, it is important to know that post the Coronavirus Disease 2019 (COVID-19) pandemic, businesses have shut down, as people have already said. I know that stimulus packages have been given from the Treasury. I know that artists were helped by the Treasury by giving them a stimulus package through the Presidential Fund. All this money was coming from the taxes. That is what I believe in. Therefore, I take tax as a measure that is supposed to provide finance to pay for services.

Mr Speaker, those in the social sector, such as teachers and nurses, must be paid from the taxes that the Ministry of Finance generates because those are a cost centre. However, industries need to be protected. I will address just one issue which I think the hon. Minister of Finance needs to relook in the tax measures. That is, the tax which has been put on the importation of raw materials for distilling alcohol. I think all of you should know by now that worldwide, alcohol business does produce a lot of revenue for any Government. That should be marked. That measure does not make sense, especially now, that this Parliament has recommended for the ratification of the Free Trade Area up to the Eastern African Block.

Mr Speaker, if the Government is not careful, Zambia is going to become a dumping ground. My caution to the hon. Minister is that most companies involved in the business of distilling, and conduct their businesses in a straight manner have now closed. Soon, Zambian Breweries may also close. Of course, people will remain sobre, which is good. However, the Government will be losing revenue, which revenue it needs so direly in order to make its engines operate.

Mr Speaker, for instance, those who have cared to check will tell you that it is plain knowledge that to produce alcohol or distil alcohol in Zambia is much more expensive than to import it. What does that tell you? It tells you that every employee who is in the alcohol industry is going to go home. If you import alcohol from Malawi, you will land it in Zambia cheaper than if you produce it here. The story was the same under the Nitrogen Chemicals of Zambia (NCZ). We were told that NCZ was closed because it was cheaper to import fertiliser than to produce it here. That shows you the lopsidedness of our economy.

Mr Speaker, therefore, some of the tax solutions that the Government needs to look at include making sure that the local industries are protected. It should ring-fence them from collapsing as a result of cheap imports. The caution that I have for the Government is that as it ratifies the Free Trade Area Protocol, it should expect more trouble and more job losses because the country is going to be getting much cheaper things coming from outside, including things that this country can ordinarily produce.

Mr Speaker, I would like to request the Government to relook at the taxes that it has imposed on distilling and importation of alcohol material in this country so that the producers and employers of your fellow Zambians can produce this commodity at a fairly cheaper price than those imported ones. This is because what we are doing is actually creating jobs for the Malawians and South Africans who bring in finished products at the expense of our people whose interest and aspirations we swore to defend.

Mr Speaker, I thank you.

Dr Ng’andu: Mr Speaker, I wish to thank the Budget Committee and the hon. Members for supporting this Bill. I also wish to take note of the observations that have been made by your Committee as well as issues raised by hon. Members of the House. I would like to respond to some of the comments that have been made.

Mr Speaker, however, in accordance with your counsel to the House, I shall refrain from commenting on submissions that have been made for their political drama rather than responding to the issues in the Bill that I have presented before the House.

Mr Speaker, the Bill before this House is seeking to increase Customs Duty on selected agricultural products to 40 per cent from 25 per cent. The products include meat, meat products and fish. This measure is intended to protect the local industry and ensure that the sector grows to a level where this country can become a net exporter of agro products. We have to start somewhere, and this is one measure that will encourage us to start. We are giving protection to our own industries in this country.

Sir, the Budget Committee expressed concern on the country’s capacity to satisfy domestic demand for beef and fish products.

However, wide consultations were conducted with key shareholders in considering this measure and it was established that with a conducive business environment, the country has the potential to meet the required demand. Again, we have to commit ourselves to producing. We cannot be a people that must rely on eating what others produce. We have to start producing, and this measure is supposed to encourage us to start producing.

Mr Speaker, having said that, this measure will be monitored closely to ensure that we achieve on the policy objectives. It is one thing to have policy and quite another to implement. So, in the implementation of policy, we shall pay attention to the progress that is made.

Sir, the Bill also seeks to introduce a 20 per cent selected goods surtax on imported ethyl alcohol to give advantage to local producers of ethyl alcohol. What we are trying to do here is to make it expansive for those who want to import alcohol and give incentives to those who are producing it here. We have already seen that people in the cassava industry are beginning to produce ethyl alcohol. This is an infant industry, and it requires our protection. This is what we are trying to do. If we give up this measure and just say, we will continue to import that is how alcohol becomes cheaper; we will never achieve the objective that we are looking for.

Mr Speaker, your Committee recommended that going forward, the country should consider the use of trade remedies and other appropriate instruments to build domestic production capacity. The recommendation by your Committee has been noted. However, it is also important to realise that trade remedies are very difficult to implement and take a long time. The measure we have introduced is a response to an immediate problem. Everybody acknowledges that our companies are hard hit and require protection. That is why we are using these measures. If we go to trade remedies, it will take a long time to determine exactly who is dumping goods here and what the reaction should be. However, this short-term measure is intended for one year to help countries come out of their current problems.

Mr Speaker, mention also was made of the Multi-Facility Economic Zone (MFEZ) and the fact that I have not brought to this House a Bill to bring into effect the new investment threshold that we proposed. I would like to inform the House that the hon. Minster of Commence, Trade and Industry will be coming to the House to bring a Bill that will give effect to the changes that are contained in my proposals.

Sir, the Bill is straightforward and I commend it to the House.

Mr Speaker, I beg to move.

Question put and agreed to and the Bill read a second time.

Committed to a committee of the Whole House.

Committee Stage today

THE PROPERTY TRANSFER TAX (Amendment) BILL, 2020

Dr Ng’andu: Mr Speaker, I beg to move that the Bill be now read a second time.

Mr Speaker, the Bill before the House is principally seeking to amend the Property Transfer Act so as to achieve the following:

1. apply property transfer tax, in the case of an indirect transfer of shares, to a transfer of shares that represents at least ten per cent of the value of shares in a company incorporated in the Republic;
2. redefine the criteria for the determination of realised value on indirect transfer of shares;
3. remove trusts from the list of exemption of property transfer tax; and
4. provide for matters connected with, or incidental to, the forgoing.

Mr Speaker, this Bill is also fairly straightforward, and I commend it to the House.

Mr Simfukwe (Mbala): Mr Speaker, in accordance with its terms of reference, as provided for in the Standing Orders, your Committee was tasked to scrutinise the Property Transfer Tax Amendment Bill, 2020.

Sir, the Property Transfer Tax Amendment Bill, 2020 seeks to amend the Property Transfer Tax Act, Cap 340 of the Laws of Zambia so as to apply Property Transfer Tax in the case of an indirect transfer of shares to a transfer of shares that represent, at least, 10 per cent of the value of shares in a company incorporated in the Republic, among other things.

Mr Speaker, the House may wish to know that all stakeholders who appeared before your Committee were in support of the Bill. Be that as it may, allow me to simply highlight a few pertinent issues encountered by your Committee during its deliberations.

Mr Speaker, your Committee observes that amendment of Section 4, which prescribes that:

     “A transfer of shares is not liable to Property Transfer Tax if the total value of the transferred shares over a

      period of three years does not exceed a total value of shares in the company incorporated in the Republic.”

Sir, this does not resolve the problem encountered in the implementation of the Act, as the amendment does not address the issue of foreign listed companies and companies listed on the Stock Exchange registered under the Zambian Securities and Exchange Act, which are normally exempted from paying Property Transfer Tax.

Mr Speaker, therefore, your Committee recommends that the Bill be clear about the exemptions extended to foreign listed companies and companies listed on a stock exchange registered under the Zambian Securities and Exchange Act.

Sir, your Committee further observes that the amendment does not provide for the taxation of a Zambian company with a parent company domiciled outside the Republic. Therefore, your Committee recommends that the provision should be revised to require a Zambian subsidiary with a mother company outside the Republic to pay Property Transfer Tax.

Sir, your Committee expresses concern regarding Clause 6, which provides for the removal of trusts from the exemption list with regard to the payment of Property Transfer Tax. While agreeing with the stakeholders who contended that the provision had been abused by trusts to avoid tax, your Committee is of the view that this provision will discourage individuals from bequeathing property to their dependents. In this regard, your Committee recommends that the Bill provides for the segregation of trusts into categories for purposes of exemption so that family trusts should continue enjoying the exemption.

Mr Speaker, on behalf of the Committee members, I wish to express our gratitude to you and the Office of the Clerk of the National Assembly for the guidance and support rendered to it throughout its deliberations. It is further, indebted to all the witnesses who appeared before it for their corporation in providing the necessary briefs.

Mr Speaker, I thank you.

Mr Ngulube: Mr Speaker, thank you, once again, for this opportunity to add my voice to the debate on the proposed amendment to the Property Transfer Tax Act.

Mr Speaker, we would like to commend His Excellency the President of the Republic of Zambia and the hon. Minister of Finance for having taken into account several submissions made by various people and stakeholders in relation to the amendment of the Property Transfer Tax.

Mr Speaker, as you may be aware, Property Transfer Tax was only restricted to properties like land and buildings. However, I think the Zambia Revenue Authority (ZRA) has now realised that it is important for people to pay Property Transfer Trust even when they are buying shares in a company. What this Bill is seeking to address is to ensure that when it comes to the payment of taxes by companies incorporated abroad or companies that are operating through subsidiaries incorporated in Zambia, the correct amount of taxes should be paid.

Mr Speaker, it is also important to note that these proposed amendments are progressive in the sense that they are also restricting the transfer of shares to being done in Kwacha. We have seen transactions being conducted in foreign currencies and this has adversely affected the exchange rate.

Sir, of particular interest is the proposed amendment in Section 5 (2A) and (2B), and I will read for the benefit of those that do not have a copy. It states as follows:

   “(2A)   Where the property to be valued is a share issued by a company incorporated outside the Republic that

   directly or indirectly owns at least ten percent of a company incorporated in the Republic, the realised value

   shall be whichever is greater of the –

1. effective shareholding multiplied by the value of the transferred shares;

   (2B)    Despite subsection (2A), where the Commissioner General is satisfied that a transfer is made for the

   purpose of group reorganisation and that there is no change in the effective shareholding with respect to the

   company incorporated in the Republic, the Commissioner General may determine a nil value for that transfer

   except that this subsection shall not apply to a company that has not been part of the group of companies for 

   at least three years preceding the transfer.”

Mr Speaker, this helps those companies that may want to reorganise themselves. They cannot be forced to pay taxes if it is the same shareholding transferred between the same people. So, the Commissioner General is, again, being given power to make a determination as to whether there should be a new value or there should be no value. This discretion that is being given to the Commissioner General is good for the industry.

Mr Speaker, I also note that in the proposed amendment in Section 5 (2C), the effective shareholding means the extent of control or ownership in the company incorporated in the republic by the company incorporated outside the republic expressed as a percentage.

Mr Speaker, for those who deal with such kinds of transactions, this clearly means that it is important to know who controls a company, whether it is the local shareholding or the external shareholding.

Mr Speaker, I am also aware that there has been an abuse of the Property Transfer Tax (PTT). People have been hiding in the names of trusts so that they do not pay PTT at either 5 or 10 per cent. This has been abused to the extent that civil servants and many other people are being swindled. Companies are being incorporated in the names of the so-called “trusts”. The owners of these trusts are telling people that they will keep their money and buy properties and buildings and after people retire, they can go and get their money from these trusts. Many people in Lusaka and on the Copperbelt have actually fallen prey to such kinds of things.

Mr Speaker, I think that trusts are now being removed from such practices. Everyone must pay the correct taxes and this will prevent or reduce the number of people hiding in the names of trusts for purposes of perpetrating such kind of illegalities. We have also in mind one politician who actually did this to a lot of Zambians. We will not mention him here, but we know that his companies are involved in such kinds of activities and the people of Zambia are watching very closely.

Sir, we want to commend the hon. Minister of Finance for responding to the cries of the poor civil servants and miners on the Copperbelt whose wages are being deducted heavily for purposes of monies being taken offshore and to companies that are hiding abroad, which, today, come to Zambia and say they cannot pay any taxes.

Mr Speaker, with those few remarks, I thank you and say, “I end here”. I rest my case.

I thank you, Sir.

Dr Ng’andu: Mr Speaker, once again, I just want to thank the Committee Chair, hon. Members of your Committee and those who have spoken on this Bill.

Mr Speaker, this Bill is seeking to apply Property Transfer Tax (PTT) in cases of indirect transfer of shares that represents, at least, 10 per cent of the value of shares in a company incorporated in the Republic. The present wording of the PTT imposes a tax burden on a local Zambian entity whenever shares in a foreign entity that has a direct or indirect holding of more than 10 per cent of a local Zambian entity are sold or transferred, irrespective of the value of the shares that are transferred.

Mr Speaker, the current wording has the unintended consequence of placing undue compliance burden on the local entity to track any and all movements of shares in their parent company. This means that the trading taking place on the capital market becomes a problem for the company that is here because it has to track the changes and these are very difficult changes to follow. Additionally, the local entity has a compliance burden of providing the details of the shareholders that have transferred the shares, which may be unknown to both the foreign entity and the associated company. That is what we are trying to deal with.

Sir, the amendment is intended to prescribe that in the case of indirect transfer of shares for the transaction to be liable to PTT, the foreign transfer of shares should represent a material transfer of, at least, 10 per cent of the value of the shares in the associated Zambian company.

Mr Speaker, the requirement to account for the PTT on indirect transfer of shares will only apply when the shares are transferred, that is, from an existing shareholder to another. It will not apply in an instance where shares are issued for the first time as a way of raising capital.

Sir, once again, this is a fairly straightforward Bill, but I just want to end by noting that one of the attempts we have made here is to deal with the everlasting challenge of closing loopholes through which tax leakages occur. We believe that by introducing the rule relating to trusts, we will be able to seal such loopholes and, therefore, be able to raise more revenue for the people of this country.

Mr Speaker, I thank you.

Question put and agreed to and the Bill read a second time.

Committed to a committee of the Whole House.

Committee today.

THE VALUE ADDED TAX (Amendment) BILL, 2020

Dr Ng’andu: Mr Speaker, I beg to move that the Bill be now read a second time.

Sir, the Bill before this House is principally seeking to amend the Value Added Tax Act so as to:

1. provide for the use of an electronic payment machine as a payment method and introduce a penalty for failure to comply;
2. provide for a trigger point for the computation of the two year period for an assessment based on an incorrect of inadequate return;
3. revise the penalty for submission of false returns and statements;
4. provide for an upward adjustment of the penalty for evasion of taxation; and
5. provide for matters connected with, or incidental to, the foregoing.

Sir, this Bill is straightforward and I commend it to the House.

Mr Speaker, I beg to move.

Mr Simfukwe: Mr Speaker, in accordance with its terms of reference, as provided for in the Standing Orders, your Committee was tasked to scrutinise the Value Added Tax (Amendment) Bill No. 23 of 2020.

Sir, let me state, from the outset, that the Value Added Tax (Amendment) Bill, 2020 is aimed at introducing the mandatory use of an electronic payment machine as a payment method and introducing a penalty for failure to comply.

Mr Speaker, most stakeholders who appeared before your Committee supported the provision contending that the use of an electronic payment machine, as a payment method when promulgated in the Bill, would enhance revenue collection. However, they expressed concern about internet connectivity and power outages. The stakeholders reasoned that unless connectivity problems were resolved, companies would procure gadgets that they would not be able to use. Further, given the electricity load management and inadequate internet coverage, criminalising the failure to use an electronic payment machine appeared extreme, as it did not take into account the country’s situation regarding energy and internet availability.

In this regard, your Committee proposed that, for now, failure to use the Electronic Fiscal Device (EFD) should be penalised, but not be criminalised until connectivity and power outage issues are resolved further. The requirement to use the electronic payment machines is a new one which might require preparedness on the part of the end users. In this regard, your Committee recommends that there should be a grace period before the measure is implemented to allow for tax payers to comply.

Mr Speaker, your Committee notes that the deployment of electronic payment machines should not be construed as a panacea for improving tax compliance because, as with any other technological improvements, it cannot on its own achieve meaningful results whether in terms of revenue gains or permanent compliance improvements. Therefore, there is a need to enhance other compliance mechanisms for optimum benefits.

Mr Speaker, your Committee was informed, for instance, that there were gadgets that could be fixed to these devices to enable them to delete a transaction before it is captured by the Zambia Revenue Authority (ZRA). In this regard, your Committee recommends that the ZRA develops capacity to track transactions before they are deleted.

Mr Speaker, on Clause 4, which is providing for the amendment of Section 21(6), your Committee observed that this amendment implies that an assessment which is based on an incorrect and inadequate return only becomes void if it is made two years after the Commissioner-General has concluded an audit. This entails that, before the two years elapse, the assessment cannot be considered void. In this regard, your Committee agrees with the stakeholders who contended that incorrect assessment should be considered void immediately the assessment is made.

Mr Speaker, in conclusion, allow me to place on record my appreciation to all the stakeholders who appeared before your Committee and made submissions on the Bill. I also wish to thank you and the Office of the Clerk of the National Assembly for the guidance and support rendered to your Committee during the consideration of the Bill.

Mr Speaker, I thank you.

Mr Ngulube: Mr Speaker, I want to speak very briefly on the issue of electronic devices. I commend the Zambia Revenue Authority (ZRA) for this move because it has reduced a lot of – I do not want to use the word “cheating”, but I do not know the word to use for now.

Mr Speaker, anyway –

Mr Speaker: Order!

Withdraw the word “cheating” because you have already uttered it.

Laughter

Mr Ngulube: Mr Speaker, I withdraw the word “cheating” and simply say falsehoods, maybe, while I still look for a word that will suit my situation.

Interruptions

Mr Ngulube: Mr Speaker, we are aware that almost all these people who are trading now have been told by the ZRA that they must issue receipts. I think this is more than three years down the line and the grace periods have been given. Everyone is aware that all the people who are trading must issue receipts. They must, firstly, have electronic devices and, secondly, issue receipts for all purchases.

Mr Speaker, advertisements have run on both radio and television and we all know that when you purchase something now, you must be given a receipt. People resisting this are those who evade tax, those who want to sell things worth K1 million in a year and say that they only sold worth K200. So, the ZRA has done very well to introduce this measure. In fact, the punishment should stand because we are aware that some of these people do not pay anywhere. They neither pay to the National Pension Scheme Authority (NAPSA) nor the ZRA. So, how do they trade when they cannot actually pay correct taxes? What is important is that everyone who is in business must pay their fair share of taxes.

Sir, I am also reminded of some of these companies that are operating within Zambia. Some of these businesses with fictitious owners collect a lot of money at the end of every month, but do not want to account for it. We are aware of some individuals who are Zambians, but hiding in each and every offshore account. At the end of the day, the ZRA will not know who should pay the taxes. So, the only time you can collect your taxes is at the point of sale. The moment someone makes a sale, he/she must declare the taxes.

Mr Speaker, there are those people who fail to produce documents when the ZRA demands for them. So, the punishment for failing to produce documents must be imprisonment. We are aware of countries, I will not mention here, where just failure to account for a business would land someone in jail even for five years. In fact, these countries are actually worse than that because they can even dissolve the whole corporation or grab the company from you. We are aware of international oil companies (IOCs) that were grabbed by governments for failing to pay. However, here in Zambia, when it happens like that, people will say it is politics.

Mr Speaker, Zambia is not a poor country and that is why every investor wants to come here. What is important is that people must pay the correct taxes and pay workers the correct amounts of wages.

It is, therefore, shocking to note that the same people who accuse the Government of not collecting enough taxes for exercises such as the issuance of National Registration Cards (NRCs) would want to protect such kinds of individuals.

Mr Speaker, I remember very well that when every Zambian was expecting that we, as Parliament, would sit and resolve some of these issues collectively, some people went and found music more important than –

Mr Speaker: Hon. Deputy Chief Whip, let us not go there.

Mr Ngulube: Mr Speaker, I am guided. I want to echo the sentiments of the hon. Minister of Tourism and Arts that when the people who were conducting the mobile voter registration were in our constituencies, some people were in Lusaka, but now want the Government to reopen the process. I do not think –

Mr Speaker: Hon. Member, what has that got to do with the Value Added Tax (VAT)?

Interruptions

Mr Ngulube: Mr Speaker, let me connect it to the payment of VAT. There is an argument that we are all Zambians and that the Government must collect enough taxes and give us services. It is claimed that the Government is collecting taxes, but not rendering services. When the Government has rendered a service, but people choose not to participate by going elsewhere where the service is not being provided, they cannot come back and cry that the Government is not providing the service.

Mr Speaker, I know that one of the cheapest drinks is called fruitola. We saw people dancing over such drinks, but they want to cry today that the Government is discriminating against them when we all know that the opportunity given by the Government must be taken as and when it comes. So, those people who are crying now, I remember, were dancing whilst drinking fruitola and eating Hungry Lion. They forgot the need to provide a service to their people when the Government rendered registration officers in their constituencies. They should have actually taken it as more important and more serious than respecting one individual who gave them a drink called Four Cousins, which made them forget about their civic responsibilities.

Mr Speaker, I thank you.

Hon. Government Members: Hear, hear!

Laughter

Dr Ng’andu: Mr Speaker, once again, I want to thank the Chairperson of the Budget Committee and members of your Committee for their comments, some of which I would like to respond to.

Mr Speaker, the Bill is principally seeking to provide for the use of electronic payment machines as a payment option and introduce a penalty for failure to comply. I need to make it clear that this is what we referred to as the Point of Sale Terminal in which case you offer your card as a means of payment. It is not the issuing of receipts, but actually the payment that you make across using your card.

Mr Speaker, currently, under the Value Added Tax Act, a registered supplier is obliged to have an electronic payment machine at the point of sale. However, there is no provision for a penalty for failure to use an electronic payment machine as requested by the customer. An electronic payment machine, according to the Value Added Tax Act, means a payment terminal used by taxable supplier to receive payment. Now, it should be further noted that the requirement to have machines is already in force. This is not a new provision. It was legislated in the 2019 Budget and made effective in 2020. What are being introduced here are the penalties for failure to comply.

Mr Speaker, the fine that is being proposed is to be chargeable where the supplier chooses not to use the payment machine at a time when it is in a usable state and, if there are any justifiable circumstances to the satisfaction of the Commissioner-General that the electronic machine was not usable or, for whatever reason there was no power and it could not be used, then the Commissioner-General will not charge.

Mr Speaker, I think this is a fairly straight forward Bill. It is another measure. It is not a sufficient measure, but is one of the measures that we are introducing to try to seal the many loop holes that we see in our tax system.

Mr Speaker, I beg to move.

Question put and agreed to and the Bill read a second time.

Committed to a committee of the Whole House.

Committee today, Wednesday, 9^th December, 2020.

SKILLS DEVELOPMENT LEVY (Amendment) BILL, 2020

Mr Ng’andu: Mr Speaker, I beg to move that the Bill be now read a second time.

Mr Speaker, the Bill before this House is principally seeking to amend the Skills Development Levy Act so as to revise the provisions relating to the charge of skills development levy. This Bill is straightforward, and I commend it to the House.

I thank you, Sir.

Mr Simfukwe: Mr Speaker, in accordance with its terms of reference, as provided for in the Standing Orders, your Committee was tasked to scrutinise the Skills Development Levy (Amendment) Bill, No. 24 of 2020.

Sir, in order to put into context the rationale for this amendment, the House may wish to note that the Government enacted the Skills Development Levy Act, No. 46 of 2016, which established the Skills Development Fund (SDF) with effect from January 2017. The main objective of this levy was to provide financial resources for skills development in Zambia. It was meant to help mitigate the enormous challenges faced in the Technical Education, Vocational and Entrepreneurship Training (TEVET) sector.

Mr Speaker, all stakeholders who appeared before your Committee supported the Bill as its amendment would clear the misunderstanding on whether the levy should be payable by the employer or employee.

Sir, your Committee notes that the proposed amendment of Section 4 of the Skills Development Levy Act No. 46 of 2016 is the solution in addressing the ambiguity that exists in the Act on whether the levy is to be paid by the employer or employee. It is the view of your Committee that the amendment will settle the matter and eliminate the ambiguities that currently exist in the law and, ultimately, enhance revenue collection through the fund. Your Committee is also concerned with the delay in the disbursement of the Skills Development Fund by the Treasury.

Mr Speaker, as I conclude, let me inform the august House that your Committee is generally concerned with the perpetual delay in the presentation of money Bills to the National Assembly by the Executive. It not only negatively impacts the ability of various stakeholders to make well researched submissions to your Committee, but it also limits the quantum and quality of engagements that your Committee can have with relevant stakeholders.

Sir, in this vein, your Committee urges the Executive to henceforth ensure that money Bills are submitted to the National Assembly for consideration immediately after the presentation of the National Budget by the hon. Minister of Finance in order for it to have adequate time to scrutinise the Bills, as has been the case occasionally in the past.

Mr Speaker, in conclusion allow me to render my sincere gratitude to you and the Clerk of the National Assembly for the guidance and support rendered to your Committee throughout its deliberations. Gratitude is also extended to all the stakeholders who made both written and oral submissions which greatly assisted your Committee in its work.

I thank you, Sir.

Mr Ng’onga (Kaputa): Mr Speaker, I, on behalf of the people of Kaputa, thank you for this opportunity to support the Skills Development Levy (Amendment) Bill, No. 24 of 2020 that has been brought to the House.

Mr Speaker, even as this Act was enacted in 2016, there was a general consensus by both the stakeholders and us, who represent the people, that there was a need for creation of these skills development funds. When we looked at the skills development gap in our school leavers and compared ourselves with our neighbouring countries like Zimbabwe, where between the 1970s and the 1990s even up to the early 2002, there was a skills set that was developed in that country, we see that even now Zambia tends to import the skills set instead of only getting the lowly skilled workers in our country.

Mr Speaker, therefore, this Skills Development Fund was very important in order to ensure that we move in the same direction or even better. The amendment to this Act is also welcome and supported. To agree with what your Committee was able to discuss and find out in its report, the delays in the disbursement of these funds that go for these skills centres, even as we amend these Acts, will have enormous detrimental effects, especially, on the tertiary or the skills centres where we want to train our skills officers. In Kaputa, we have a skills centre which has always been trying to get some funding through this particular window. 

Sir, every time we get to the Ministry of Higher Education, we are told that the funds are not there. However, this particular levy is supposed to answer to those challenges. We may not have allocations in the budget to deal with this particular sector but if the funds are collected, please, let us ensure that the disbursements for this levy are timely and are allocated to the institutions that are able to implement. It is the only way we will all move together without leaving anyone behind.

Mr Speaker, the hon. Minister of Finance may not be aware or could be aware that in the area of Information and Communications Technology (ICT), the rural sector, Kaputa inclusive,  is still far behind, but I know there are many other areas that are far behind. Therefore, when there is a levy like this, it should actually go to support institutions that are training and helping our children to get to the same level as their counterparts. 

Sir, the clarification that we seek from these amendments as to who should pay the levy between the employer or the employee is a very welcome move so that every employer should know that this levy is supposed to be paid by the employer and not the employee. Therefore, having this amendment will definitely settle what was ambiguous in the previous law which is actually a welcome move.

Sir, with these very few words, I wish to thank you for having given me this opportunity to say something on the Skills Development Levy (Amendment) Bill, No. 24 of 2020.

I thank you, Sir.

Dr Malama (Kanchibiya): Mr Speaker, I will be very brief. Firstly, the youths in the rural constituencies will be able to benefit greatly from the Skills Development Levy (Amendment) Bill, No. 24 of 2020, including the workers. Therefore, as a Member of Parliament who represents a rural area, I do support the Skills Development Levy (Amendment) Bill, No. 24 of 2020.

Mr Speaker, the Zambia we need requires that we have these skills development. Also just to mention and thank his Excellency the President and the Patriotic Front (PF) Government for finding innovation to ensure that the youths find employment. I know there may be some critics to this Bill but the Government is making every effect to ensure that the youths, the unemployed, and the employed have good skills. This was the basis of the Government’s initiative to ensure that we support this Bill. This is why I am supporting it. Like I said, I will speak in less than a minute.

I thank you, Sir.   

Mr Kamboni (Kalomo Central): Mr Speaker, I would like to thank you for the opportunity to debate.

Sir, I was one of the architects of the introduction of the Skills Development Levy which we thought could help in the education sector, as most of the colleges had ended up being commercial colleges because of a lack of buying equipment for laboratories and the science level in the country was really going down. So, we thought the Skills Development Levy would come and fill in that gap so that laboratories could be built and the country could move from where it is to a knowledge based economy. We can create employment and solve many of Zambia’s problems in terms of employment. However, what is disappointing about the Patriotic Front (PF) Government is that of the money that was firstly collected, about K278 million, not all that money went to the Ministry of Higher Education, yet in the beginning we were told that all the money was supposed to go to the Ministry of Higher Education but it did not go. The ministry was given very little money. More money remained with the Treasury. When we asked, what we were told was that when the money goes to Control 99, it is free to be used for anything.

Mr Speaker, so the Skills Development Levy, in short, has not worked for what it was intended. What is shocking is that at the beginning, we collected more money of about K278 million, the following year. What was estimated to be collected was less, but we were not given any record on how much was collected. This is discouraging people from paying taxes. When this tax is paid, we have a duty to show the citizens that look, this is the money we collected and this is what it has been able to do. That has been lacking. The hon. Minister of Finance must make sure that the Votes that are there are utilised the way they are intended to be used. This idea of mixing Votes, shifting it from here and there does not work very well in accounts. So, for me, when I go round in these schools, this money has not yet created any impact. You hear from the word of mouth but when you go to the schools what you see is different.

Mr Speaker, it is very important because any Government that has no respect for education vis-a-vis science is not a Government worth its salt. Science can help a lot. It has created a lot of employment. These gadgets which we are using, including these tablets, are from science. This is why we are trying to say that let us try to make our economy benefit from education, knowledge and science. That is why companies are giving this Skills Development Levy so that our citizens can have this fee. If only part of the money is disbursed for this purpose instead of the whole package and the rest is diverted to other areas, then, we lose focus on what we are supposed to do.

Mr Speaker those paying the tax are also watching that the money is not working for what it was intended. Truly speaking, I think the idea of Skills Development Levy is a very good one but it is those who are implementing it who do not simply care about education. They do not think that education can solve Zambia’s problems, yet we need this levy. 

Sir, when you look at the vocational pathway, we have a problem now. We introduce a syllabus that has a vocational and an academic pathway. The vocational pathway has no equipment or materials in schools. So, we are back to square one where that syllabus or curriculum has become irrelevant. This money could have filled that gap so that we could buy new equipment and built science laboratories. This way, we can have a revolution of our science so that it can begin to produce something that citizens can see. My plea to those who are charged with taking care of this money is that, let every ngwee from Skills Development Levy go to what it is intended for. For now, it has not done so. It has been diverted to other things, which is really a shame.

Mr Speaker, thank you very much.

Dr Ng’andu: Mr Speaker, I would like to, again, thank your Committee. There has not been much disagreement on the proposal that the responsibility of paying for the levy should be borne by the employer as opposed to the employee. The issues relating to the proper implementation or use of the levy is a matter that I am sure can be addressed as we implement it. Therefore, I think it is a very straightforward Bill and I commend it to the House.

I thank you, Sir.

Question put and agreed to and the Bill read a second time.

Committed to a committee of the Whole House.

Committee today, 9^th December, 2020.

THE MINES AND MINERALS DEVELOPMENT (Amendment) BILL, 2020

Dr Ng’andu: Mr Speaker, the Bill before this House is principally seeking to amend the Mines and Minerals Development Act so as to provide for the change in the name of Metal Bulletin.

Mr Speaker, this Bill is straightforward and I commend it to the House for consideration.

I thank you, Sir.

Mr Simfukwe: Mr Speaker, in accordance with its terms of reference, as provided for in the Standing Orders, your Committee was tasked to scrutinise the Mines and Minerals Development (Amendment) Bill, N.A.B No. 25 of 2020.

Mr Speaker, the object of the Bill is to amend the Mines and Minerals Development Act, No. 11 of 2015 so as to provide the change in name of the Metal Bulletin.

Mr Speaker, the Mines and Minerals Development Act, No. 11 of 2015 was enacted to, among others, provide for the payment of royalties on mineral production in Zambia. As part of the global traders in minerals, Zambia has to align its prices with those world renowned mineral markets, such as the London Metal Exchange (LME), and keep abreast of developments in the world regarding pricing of minerals.

Mr Speaker, to do this, Zambia relies on Fastmarkets MB, previously known as Metal Bulletin, which is a specialist international publisher and information provider for the global steel, non-ferrous and scrap metals markets. This publication is important as it is used by many countries and stakeholders to get information on prices of minerals, or assist in determining royalties payable on mineral production.

Sir, in view of the fact that the principal Act still refers to the publication as the Metal Bulletin, it has become necessary to reflect the new name of the publication, that is, Fastmarkets MB, in the law, hence this amendment.

Mr Speaker, all the stakeholders who made submissions on the Bill are in support of the amendment. Similarly, your Committee is in full support of the Bill and recommends that the House passes it.

Mr Speaker, I thank you.

Dr Ng’andu: Mr Speaker, I thank you once again. The Bill is straightforward and I would like to thank the House for giving support and agreeing that the name can be changed from Metal Bulletin to Fastmarkets MB.

Mr Speaker, I beg to move.

Question put and agreed to and the Bill read a second time.

Committed to the committee of the Whole House.

Committee today, 9^th December, 2020.

HOUSE IN COMMITTEE

[THE CHAIRPERSON OF COMMITTEES in the

Chair]

THE CUSTOMS AND EXCISE (Amendment) BILL, 2020

Clauses 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19 and 20 ordered to stand part of the Bill.

Schedule ordered to stand part of the Bill.

Title agreed to.

THE PROPERTY TRANSFER TAX (Amendment) BILL, 2020

Clauses 1, 2, 3, 4,

5, 6 and 7 ordered to stand part of the Bill.

Title agreed to.

THE VALUE ADDED TAX (Amendment) BILL, 2020

Clauses 1, 2, 3, 4, 5, 6, 7 and 8 ordered to stand part of the Bill.

Title agreed to.

THE SKILLS DEVELOPMENT LEVY (Amendment) BILL, 2020

Clauses 1 and 2 ordered to stand part of the Bill.

Title agreed to.

THE MINES AND MINERALS DEVELOPMENT (Amendment) BILL, 2020

Clause 1 ordered to stand part of the Bill.

CLAUSE 2 – (General amendment)

The Minister of Finance (Dr Ng’andu): Madam Chairperson, I beg to move an amendment in Clause 2 by renumbering of Clause 2 as Clause 3.

Amendment agreed to. Clause amended accordingly.

Clause 2, as amended, ordered to stand part of the Bill.

Title agreed to.

______

HOUSE RESUMED

[MR SPEAKER in the Chair]

The following Bills were reported to the House as having passed through Committee without amendments:

The Customs and Excise (Amendment) Bill, 2020

The Property Transfer Tax (Amendment) Bill, 2020

The Value Added Tax (Amendment) Bill, 2020

The Skills Development Amendment), 2020

Third Readings today.

The following Bill was reported Levy (to the House as having passed through Committee with amendments:

The Mines and Minerals Development (Amendment) Bill, 2020

Report Stage today.

REPORT STAGE

The Mines and Minerals Development (Amendment) Bill, 2020.

Report adopted.

Third Reading today.

THIRD READING

The following Bill was read the third time and passed:

The Mines and Minerals Development (Amendment) Bill, 2020

_______

MOTION

ADJOURNMENT

The Vice-President (Mrs Wina): Mr Speaker, I beg to move that the House do now adjourn.

Question put and agreed to.

_______

The House adjourned at1646 hours until 1430 hours on Thursday, 10^th December, 2020.

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