ENHANCED HUMAN DEVELOPMENT REDUCTION 2018 CITIZENS BUDGET "ACCELERATING FISCAL FITNESS FOR SUSTAINED INCLUSIVE GROWTH WITHOUT LEAVING ANYONE BEHIND"

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1 2018 CITIZENS BUDGET "ACCELERATING FISCAL FITNESS FOR SUSTAINED INCLUSIVE GROWTH WITHOUT LEAVING ANYONE BEHIND" C O N D U C I V E G OV E R N A N C E E N V I RO N M E N T ENHANCED HUMAN DEVELOPMENT R E D U C D E D D E V E L O M E N TA L I N E Q UA L I T I E S P OV E RT Y REDUCTION D I V E R S I F I C AT I O N & J O B C R E AT I O N

2 SUMMARY OF THE 2018 BUDGET BORROWING FROM OUTSIDE THE COUNTRY (FOREIGN FINANCING) K9.0 Billion 3.2% GRANTS K2.4 Billion 0.9% BORROWING FROM WITHIN THE COUNTRY (Domestic financing) K11.2 Billion 4.0% THE 2018 NATIONAL BUDGET REVENUE SOURCES K71.6 BILLION TOTAL TAX REVENUE K41.1 Billion 14.9% % SHARE OF GDP 25.9 NONE TAX REVENUE 7.9 Billion 2.9% SOCIAL PROTECTION K2.3 Billion (3.2%) EDUCATION K11.6 Billion (16.1% ) RECREATION, CULTURE & RELIGION K451.2 Million (0.6%) HEALTH K6.8 Billion (9.5% ) GENERAL PUBLIC SERVICES K25.9 Billion (36.1%) EXPENDITURE THE 2018 NATIONAL BUDGET K71.6 BILLION HOUSING AND COMMUNITY AMENITIES K816.3 Million (2.2%) ENVIRONMENTAL PROTECTION K951.4 Million (1.3%) ECONOMIC AFFAIRS K17.3 Billion (24.1%) DEFENCE 3.5 Billion (4.9%) PUBLIC ORDER AND SAFETY K2.1 Billion (3% )

3 CITIZENS' BUDGET 2018 QUESTION: What is a Citizens Budget? ' THE THEME OF THE 2018 NATIONAL BUDGET IS: Accelerating fiscal fitness for sustained inclusive growth without leaving anyone behind". QUESTION: What does the budget theme mean? In 2018, Government plans to reduce borrowing by increasing the money that it collects from taxes, fees, fines and other charges in order to meet all its spending plans (fiscal fitness). This means that the country will use more of its own money to carry out projects in line with the Seventh National Development Plan (7NDP) and create an environment that will bring about more jobs and opportunities so that no Zambian is left behind (inclusiveness). The reason Government is planning to reduce its borrowing is because, if this is not done, more money will be going to payment of loans rather than to things that help people live better lives. This is because the borrowed money has to be paid back with extra money on top (interest) Citizens' Budget 2

4 ECONOMIC DEVELOPMENTS GLOBAL ECONOMIC DEVELOPMENTS The world economy (global GDP) is expected to grow by 3.5 percent in 2017 compared to 3.2 percent in This means that the value of all goods and services that will be produced in the whole world will increase by 3.5 percent by the end of 2017 compared to the increase of 3.2 percent in G LO B A L ( G D P ) 3.2% 3.5% 2016 G LO B A L ( G D P ) E XP E CT E D TO G R OW BY 3.5 P E R CE NT IN DOMESTIC ECONOMIC DEVELOPMENTS The value of all goods and services produced in Zambia in 2017 has continued to grow especially those in the mining, agriculture and manufacturing sectors. This has been supported by reduced load shedding due to improved electricity generation. By the end of 2017, Zambia's economic growth is expected to be above 4.0 percent compared to 3.8 percent in QUESTION: Is there a link between what is happening elsewhere in the world and Zambia? Zambia sells (exports) goods and services on the global market (to other countries). When the global economy improves, people outside Zambia will have more money to buy things that are produced in Zambia which means that Zambian exports to the rest of the world will increase. This brings more money into the country and so the Zambian economy improves Citizens' Budget

5 ECONOMIC TARGETS Increase the value of goods and services produced in Zambia by 5 percent compared to Make sure the prices of goods and services do not increase by more than 8 percent during the year. Grow the agriculture, manufacturing, tourism and energy (especially electricity) sectors. Make sure that at any point, the country has foreign currency which is enough to buy (import) goods and services from outside the country for at least three months. Increase the amount of money that the Government collects from within Zambia through taxes, fees, fines and other charges by improving the ways through which Government collects money from people and businesses. Only borrow money that Zambia is able to pay back. Pay people and businesses who are owed money by the Government for supplying goods and services (In 2017, Government has paid off K6 billion out of K19 billion that was owed as at December, 2016) Citizens' Budget 4

6 QUESTION: With the Seventh National Development Plan that has been developed, how will Government work starting in 2018? The Seventh National Development Plan (7NDP) is built on five pillars (strategic areas) and has introduced an integrated multi-sectorial approach to development. This means that, when one Government Ministry is carrying out a project, it will make sure that all the other ministries that are related to the project are involved from the beginning to the end. For example, when the Ministry of Agriculture is creating a farm block, it will work with ministries such as the Ministries of Energy, Housing and Infrastructure, Education and Health to make sure that all the necessary services (water, electricity, roads, schools, hospitals etc.) are provided in time, within the area, so that people find it easy to move to the area and start farming. OT HE R CH AR GE S FE ES & FI NE S Citizens' Budget

7 QUESTION: What are the 7NDP five pillars and what do they mean? PILLAR ONE: Economic diversification and job creation Government will not only depend on copper to raise its money and create jobs but it will also focus on boosting other sectors especially agriculture, manufacturing, tourism and energy to create jobs and encourage production of various goods and services that can be sold on the local market or outside the country. PILLAR TWO: Poverty and vulnerability reduction - Government will develop and continue with programmes that help the poor to survive and become active citizens who also contribute to business and development of the country. Therefore, the Government will continue to make sure that more money is provided for social protection programmes, such as the Social Cash Transfer, Food Security Pack and pensions in the National Budgets of PILLAR THREE: Reducing developmental inequalities Government will work towards making sure that education, health, clean water, sanitation and other public goods and services such as roads and electricity, which promote economic (business) activity, are made available in all parts of Zambia so that rural areas also become developed. PILLAR FOUR: Enhancing human development Government will increase its efforts to make sure that more Zambians are in good health and are well educated so that they can be able to live better lives and contribute to economic development. PILLAR FIVE: Creating a conducive governance environment for a diversified and inclusive economy Government will make sure that all the policies, laws and systems are developed, reviewed and managed in such a way that they support the achievement of all the targets set out in the 7NDP to ensure that all areas of the economy are growing and everyone is benefitting Citizens' Budget 6

8 QUESTION: How much is in the 2018 budget? Government plans to spend K71.6 BILLION K7.1 BILLION MORE THAN THE 2017 NATIONAL BUDGET (2017 NATIONAL BUDGET = 64.5 BILLION) QUESTION: Where will the money come from? K41.1 BILLION, will come from taxes K7.9 BILLION will come from non-tax revenues, that is, mineral royalty, skills levy, insurance premium, fees, fines and other service charges K11.2 BILLION will come from money borrowed from within the country through thethe Bank of Zambia whilst through treasury bills billsand andbonds bondsthat thatare areissued issued through Bank of Zambia whilst K8.98 BILLION will willcome comefrom from borrowing from outside the country; K8.98 BILLION borrowing from outside the country; and and K2.4 BILLION will be given to Zambia by cooperating partners (donors) for K2.4 programmes BILLIONand willactivities be giventhat to Zambia bycommitted cooperating partners (donors) for different they have to support. different programmes and activities that they have committed to support. QUESTION: Do ordinary Zambians Lend money to Government? Anyone from within or outside the country can lend money to the Government by investing in Government Bonds and Treasury Bills through competitive and non-competitive auctions, as long as they have an account with a commercial Bank in Zambia. The minimum amount of money that a person needs to invest is K1,000. However, if a person invests K30,000 or more they get a chance to decide what interest rate everyone will get since this amount of money puts the person in the competitive window of the auction Citizens' Citizens' Budget Budget 2018 When a person lends to the Government, they get to save and also make money through the interest that they gain over the time of the investment. Government bonds run for 2years, 3years, 5 years, 7years, 10years or 15 years. While, Treasury Bills run for 91 days, 182 days, 273 days or 364 days. A person who wants to take part in the auctions must go to Bank of Zambia (BoZ) between 9 and 12 hrs to get an application form and any other information that they may need. They can also call BoZ directly or visit their website ( zm) for more information.

9 QUESTION: Why should Government Borrow? Borrowing is sometimes necessary even at household level in order to meet needs that are required immediately, for the benefit of the individuals in the home. Similarly, the Government will borrow so that it can spend more on programmes or projects that help to ultimately improve the livelihoods of people in the country, without having to make people pay more or higher taxes. However, for Government, it has decided to borrow for programmes or projects (with high economic returns) which will contribute to Government being able to raise more money from within the country and so allow it to pay back the loans that it has. Therefore, the Government has developed a Medium Term Debt Management Strategy that will make sure that any borrowings by Government are backed by its ability to payback and that the borrowings are affordable (have low interest rates and/or a long period to pay back). In addition, the law will be changed so that any loan that Government wants to borrow will first have to be approved by the National Assembly (Parliament) so that citizens' (through their Members of Parliament) can have a say on the levels of loans (debt) the Government borrows. QUESTION: What s new on taxes? INCOME TAX DIRECT TAXES) 1. Removal of the monthly deduction of K255 on an employee s salary. Currently, workers contributing to a pension fund are allowed to remove an amount of K255 (on which no tax is paid) when calculating the amount of money that should be taxed under Pay as You Earn (PAYE). This allowance has been removed following the amended (new) Constitution of 2016 which says that pensions and gratuity should not be taxed when received. Before 2016, when a person was paid a pension or gratuity, they would be allowed to get 35 percent of their pension or gratuity without tax, but the rest would be taxed at the rate of the 10 percent. Therefore, with the change in the Constitution, pensions and gratuity are now not Taxed. This budget measure allows the K255 to be part of the taxed income so that tax relief on pensions will be received at the end. 2. Increase the Presumptive Tax applicable on buses and taxis by 50 percent. A simple form of tax called presumptive tax was introduced in 2004 on the money that individuals who own public transport vehicles such as buses, mini buses and taxis make. Over the last 13 years, there has been no change in the tax rate even though prices have been changing. Therefore, the measure is trying to update the rates Citizens' Budget 8

10 CURRENT APPLICABLE RATES PROPOSED RATES Amount of Tax Per Vehicle (K) Amount of Tax Per Vehicle (K) Type of Vehicle (Sitting Capacity) Per Annum Per Month Per Day Per Annum Per Month Per Day 64 Seater and above , seater 6, , seater 4, , seater 3, , seater 2, , seater 1, , Below 12 seater (Including Taxis) GOVERNMENT 3. Increase the Base Tax which currently stands at K150 per annum (i.e 40 ngwee per day) to K365 per annum (i.e. K1 per day). The Base tax is a tax paid by people such as street vendors and marketeers. It adds to the money collected from other taxes to improve public services, including allowing Government buy more medicines in hospitals and clinics, books for schools as well as the building of more markets and improving existing ones. 4. Make the date for submission of returns and payment of withholding tax the same. Currently the due date for payment of withholding tax falls on the 10th of every month whilst the submission of the return to which the payment relates falls on the 14th of every month. The measure will make the day for submitting withholding tax returns and making payments the same. This will make things easier for tax payers and ZRA to manage the tax Citizens' Budget

11 PROPERTY TRANSFER TAX 1. Introduce Property Transfer Tax at the rate of 5 percent for foreign transfer transactions on property domiciled (located) in Zambia. Currently, when someone makes money (income) from the sale of shares in a business or company in Zambia, they pay a tax on that income called Property Transfer Tax. However, when a Zambian registered company is sold abroad, the Government of Zambia does not get Property Transfer Tax. In other parts of the world, income from the sale of shares or businesses is taxed in the country in which the business is physically located even though the sale may take place outside that country. The Zambian Government has decided to follow this best practice to ensure that the Government also benefits from the transfer of shares aboard. 2. Introduce a Property Transfer Tax on the Transfer of Intellectual Property at the rate of 5 percent. An intellectual property is an original idea, creation or invention that someone registers with PACRA (Patent and Companies Registration Agency). Once registered, the invention is protected by a trademark, patent, or brand which can be sold or shared with others to make money. The measure means that when a person makes money by selling their idea or invention, the money that they make will be taxed at 5 % just like the Property Transfer Tax on the sale of land or shares. VALUE ADDED TAX (VAT) 1. Change the due dates for submission of withholding VAT returns to the 16th from the 18th of every month. This measure aims to separate the date that VAT agents who withhold VAT from the payments they make in order to send the tax directly to ZRA submit their returns, from the date that everyone else submits. This is in order to allow agents who withhold VAT, from 2018, to submit their returns by the 16th while everyone else will have to submit by the 18th. 2. Remove import duty on point of sale machines and sim cards. In 2018, Government will support the use of point of sale machines. These are small machines that are used for making payments for goods and services using bank ATM cards (swiping) instead of using cash. The measure will make it cheaper for people who sell goods and services to buy Point of Sale Machines as well as make it more convenient or easier to make payments and also reduce the risks of carrying huge amounts of cash Citizens' Budget 10

12 CUSTOMS AND EXCISE DUTY 1. Increase customs duty on electric geysers and stoves to 40 percent from 25 percent This measure is to encourage the use of alternative or other energy sources such as gas and solar and so reduce pressure on Zesco to generate and supply more of hydro-electricity. This will also help make sure that water in the dams such as Kariba dam, where hydro-electricity is generated builds up, lasts longer, and that the country is able to continue generating power. BOFF INVESTMENT Citizens' Budget 2. Remove import duty on fiscal cash registers. In order to make it easier for businesses to account or provide correct records for taxes, Government is in the process of linking business transactions or records of sales to the Zambia Revenue Authority. To do this, special cash registers (tills) that are linked to ZRA will need to be used by all businesses. These tills, which are known as fiscal cash registers, will be made duty free from 2018, in order to make it cheaper for businesses to obtain them.

13 4. Remove customs duty on refractory bricks (fire bricks). Refractory bricks are the bricks used to build industrial ovens (furnaces) such as incinerators at hospitals and smelters in factories. This measure is intended to support the use of these bricks in the manufacturing sector, among others. AS WELL 5. Suspend Customs Duty on inputs used in the manufacture of animal and fish feed. This is intended to make it cheaper to produce feed and promote growth of the agriculture and fisheries sectors Citizens' Budget 12

14 6. Increase the excise duty on Methylated Spirits and Denatured Alcohol (not for human consumption but for industrial use) and provide for an excise duty suspension for all manufacturers and importers of the products who register as such with the ZRA. This measure is aimed at safeguarding Government revenue by avoiding misclassification of these types of alcohol with other types of alcohol that attract excise duty at 125 percent. 7. Amend the surtax list to ensure that local manufacturers are protected from importation of similar locally produced goods! Citizens' Budget

15 STRENGTHENING THE PENALTY REGIME 1. Introduce penalties for failure to issue tax invoices by a supplier for VAT purposes. All businesses registered for VAT should issue a tax invoice when they sell things. Currently there are no penalties for failure to give a tax invoice or receipt by a seller. Therefore, the proposed measure will: i. Introduce a penalty for anyone who does not give a tax invoice or receipt; ii. Allow for the penalty to be increasing each time for people who are caught not giving tax invoices or receipts over and over again; and iii. Provide for imprisonment if the issue of not giving tax receipts can be proved to be a habit. 2. Penalties will also be introduced for failure to provide the ZRA with records when it requests for them; and 3. Penalties charged for late submission of turnover tax returns for small and medium enterprises will be separated from the general penalties and reduced from K300 to K75 This measure aims to make it easier for small businesses to go to ZRA and declare when they fail to submit their tax returns on time. So that they can be law abiding and up to date on their taxes. PENALTY CHARGES REDUCED FOR LATE SUBMISSION OF TURN OVER TAX RETURN TO K300 K75 PENA LT IES PENA LT IES FROM 2018 Citizens' Budget 14

16 OTHER MEASURES (NON - TAX) 1. Migrate all motor vehicles to electronic number plates at a reduced charge of K500 per plate instead of K975 per plate. This is to allow vehicle registration and regulation offices such as the Road Transport and Safety Agency (RTSA) and Road Development Agency (RDA) work better together and especially make it safer for people in the country. This measure will make sure that even if a number plate is removed or a motor vehicle has been stolen, the details of the vehicle will still be able to be detected when it passes through a security point due to the special features that will be fixed on all vehicles. In addition, the new features will allow people to make advance payments for road tolls that can be verified by the scanning of number plates, among other benefits Citizens' Budget

17 2. Increase the TV Levy from K3 K5. TV levy was introduced in 2003 and has not been increased since then. TV Levy is used for the payment of costs for public broadcasting. This measure will increase the coverage of TV services across the country Citizens' Budget 16

18 3. Introduce a levy of K2 per 50kg of cement This measure is intended to raise money for the infrastructure development fund Citizens' Budget

19 QUESTION: Where will Government spend the Budgeted K71.6 billion in 2018? NOTE: Government groups its spending into ten categories called Functions of Government. These are:. 1. General Public Services Defense Public Order and Safety Economic Affairs Environmental Protection Housing and Community Amenites Health Recreation Culture and Religion Education Social Protection. K25.9 billion or 36.1 percent of the total budget is planned to be spent on General Public Services Some of the notable expenditures are as follows: K14.2 billion paying back past borrowing (debt); K303.4 million set aside to pay for legal or court cases that have been decided against Government (Compensation and Awards); K1.1 billion for the Local Government Equalisation Fund (LGEF) to be given to the councils so that they can improve their service delivery to the citizens; and K218.4 million for the Constituency Development Funds (CDF) for the development of community projects in various constituencies; 2. K17.3 billion or 24.1 percent of the total budget is planned to be spent on Economic Affairs From this amount, Government plans to: Spend K1.8 billion under the e-voucher to support small scale farmers with inputs. This amount will cater for one million beneficiaries. Farmers will now have a choice on the kind of farming inputs to buy, including what crops to grow; Spend K1.1 billion for the procurement of 500,000 metric tonnes of grain and other food crops from small scale farmers, particularly in outlying or far-off areas to ensure food security; Spend K441 million for the payment of companies and individuals that supplied goods and services for the FISP and FRA programmes from previous farming seasons; Develop three farm blocks in 2018 in Muchinga, Northern and Copperbelt Provinces; 2018 Citizens' Budget 18

20 Partner with a company to create a factory at a cost of US$100 million, that will be assembling tractors and equipment for agriculture in the Lusaka South Multi Facility Economic Zone; Continue constructing dip tanks, promoting cage fish farming on lakes Mweru, Kariba, Tanganyika and Bangweulu as well as along Kafue River in addition to recruiting 750 extension service workers; Prioritise spending on major roads, bridges and air strips leading to tourism destinations; Strengthen wildlife protection through the recruitment of wildlife police officers; Set aside K940.5 million for the construction works at the Ndola and Kenneth Kaunda International Airports; Allocate K251.3 million for providing electricity in rural areas under the Rural Electrification Programme; and Spend K8.7 billion on the construction and rehabilitation of roads across Zambia. These funds will cater for traffic decongestion projects which will improve roads through the L400, C400 and Link Zambia 8,000 initiatives. Government will also work with the private sector through Private Public Partnerships (PPPs) to change the Lusaka-Ndola road from two lanes to four lanes (to make it a dual carriageway). K 11.6 billion or 16.1 percent will be spent on Education 3. Of this amount: K740.0 million is planned to be spent on completing construction of school infrastructure; K557.0 million has been provided for student loans and scholarships; K321.9 million will be set aside for completing infrastructure of universities and colleges; Citizens' Budget

21 K176.7 million will be allocated to the Skills Development Fund; and K39.6 Million will allow Government increase the number of children to benefit from the School Feeding Programme from 1.2 million in 2017 to 1.5 million in UNIVERSITY & COLLEGE INFRASTRUCTURE K321.8 MILLION will be set aside for completing off infrastructure of universities and colleges SKILLS DEVELOPMENT FUND K176.7 MILLION will be allocated to the Skills Development Fund STUDENTS LOANS & SCHOLARSHIPS K557.0 million has been provided for student loans and scholarships 4. EDUCATION K11.6 BILLION 16.1% SCHOOL INFRASTRUCTURE K740.0 MILLION is planned to be spent on completing construction of school infrastructure K6.8 billion or 9.5 percent will be spent on Health K1.2 billion will be spent on buying of drugs and medical supplies; K274.6 million has been allocated towards the construction of health infrastructure such as hospitals and clinics; K51.6 million will be spent on buying medical equipment for various clinics and hospitals; and Government will recruit an additional 1,000 health personnel. MEDICAL EQUIPMENT K51.5 MILLION will be spent on the buying of medical equipment of various clinics and hospitals HEALTH INFRASTUCTURE K274.5 MILLION has been allocated towards the construction of health infrastructure; DRUGS AND MEDICAL SUPPLIES K1.2 BILLION will be spent on buying of drugs and medical supplies; HEALTH K6.7 BILLION 9.5% 2018 Citizens' Budget 20

22 1 R E P R E S E N T S. 1 0 H E A LT H P E R S O N N E L H E A LT H P E R S O N N E L S 5. K3.5 billion or 4.9 percent of the total budget is planned to be spent on Defense This allocation will cater for the operations of the security wings. An allocation of K50.0 million has also been included for the Zambia National Service to undertake rural roads across Zambia. 6. K2.3 billion or 3.2 percent is allocated to Social Protection K1.1 billion is budgeted for paying pensions to people who have retired from Government; Government also plans to increase the number of poor people that receive money under the Social Cash Transfer Programme from 590,000 in 2017 to 700,000 in 2018 at a cost on Million. 7. K2.1 billion or 3.0 percent is planned to be spent on Public Order and Safety This allocation will cater for the operations of the Zambia Police, the Ministry of Home Affairs and the other institutions involved in providing internal security Citizens' Budget

23 8. K951.4 million or 1.3 percent will be spent on Environmental Protection This amount has been provided to strategies to mitigate and adapt to the adverse effects of climate change. Examples of programmes include, supporting the re planting of trees 9. K816.3 million or 1.1 percent will be spent on Housing and Community Amenities Of this amount: Government has allocated K564.5 million towards water supply and sanitation projects to support the provision of safe and clean water to households. The Lusaka Sanitation Project which is being undertaken by the Millennium Challenge Account Zambia, will be also allocated K239 million out of the total amount in order to complete the works that have already started; and An allocation of K17.8 million has been set aside for the construction and rehabilitation of markets and bus stations. 10. K451.2 million or 0.6 percent will be spent on Recreation, Culture and Religion 2018 Citizens' Budget 22

24 QUESTION: WHAT OTHER PROGRAMMES ARE THERE FOR THE POOR? The Food Security Pack which has been increased to K140 million in 2018 from K70 million in 2017 to support 80,000 poor farmers compared to 40,000 in 2017 that have potential to grow and produce more crops for business; In 2018, the Government s Public Welfare Assistance Scheme (PWAS) will be able to help 200,000 poor people compared to 124,000 in PWAS helps poor people who do not have transport money or money for school and medical care when they are stranded; and Government is intending to help at least 16,000 girls from poor households to pay for school fess as well as help 75,000 women with money to start businesses under the Women s Development Programme Citizens' Budget

25 BUDGET PROCESS S T E P S I N F O R M U L AT I N G T H E N AT I O N A L B U D G E T The Constitution requires Government to prepare the national budget every year and submit it to the National Assembly for approval 90 days before the end of each calendar year. The steps it takes to do this are summarised in the diagram below: 2 1 Public consultations & Policy meetings with MPSAs for preparation of a Concept Paper for submission to Cabinet. 3 Preparation of the Macro and Fiscal projections for a three-year period (Green Paper). Issuance of advert for tax policy proposals. Cabinet approval and circulation of Green Paper (Stakeholder Consultative document) to the general public. 5 4 Discussion of expenditure policies and programmes with MPSAs and consideration of tax policy proposals from the general public. 6 Consolidation and presentation of the draft Budget Speech, and estimates of revenue and expenditure (Yellow Book) to cabinet for approval. Circulation of the Budget preparation guidelines (Call Circular) to MPSAs. 7 Presentation of the Budget by the Minister of Finance and approval of the Budget by National Assembly 8 Distribution of Citizens Budget to inform citizens 24

26 THE 2018 NATIONAL BUDG ACCELERATING FISCAL FITNESS FOR SUSTAINED INCLUSIVE G EXPENDITURE ESTIMATES 2018 BUDGET Roads Infrastructure K8.7 BILLION Social Cash Transfer K721.2Million Farmer Input Support Programme (e-voucher) K1.8 BILLION Food Security Pack K140 Million Strategic Food Reserves K1.1 BILLION Public Service Pension Fund K1.1 Billion Social Protection K2.3 Billion 3.2% Education K11.6 Billion 16.1% K17.3 Billion International Airports K940.5 Million K17.3 Billion 24.1% Arrears for FISP & FRA K441 Million Skills Develop K176.7 Millio Rural Electrification Fund K251.3 Million Public Order and Safety K2.1 Billion 3.0% THE 2018 NATIONAL BUDGET Climate Change Resilience K457.6 Million Water Supply and Sanitation K564.5 Million K11.6 Billion Environmental Protection K951.4 Million 1.3% Defence K3,49 Billion 4.9% ZMW 71.6 BILLION Lusaka Sanitation Project (Millenium Challenge) K239 Million Markets and Bus Stations K17.8 Million Externa K7.3 Bi Housing and Community Amenities K816.3 Million 1.1% Health K6.8 Billion 9.5% Drugs and Medical Supplies K1.2 Billion General Public Services K25.9 Billion 36.1% General Public Services K25.9 Billion Health K6.8 Billion 9.5% Health Infrastructure K274.6 Million Medical Equipment K51.6 Million Recreation, Culture and Religion K451.2Million 0.6% Compensation and Awards K303.4 Million Public Affairs and Summit Meetings K235.3 Million Constitu K218.4 KEY INTEGRATED MULTI-SECTOR PILLAR ONE: PILLAR TWO: ECONOMIC DIVERSIFICATION AND JOB CREATION REDUCING POVERTY AND VULNERABILITY Development of farm blocks in Copperbelt, Muchinga and Northern provinces. US$100 million public private sector investment into a tractor and agricultural equipment assembly plants in the Lusaka South Multi-Facility Economic Zone. Implementation of the US$50 million Zambia Aquaculture Enterprise Development Project in Recruitment of 750 extension service workers for agriculture, fisheries and livestock. Set up of the Kafue Iron and Steel, Kalumbila and Chembe Multi-Facility Economic Zones is underway. Establishment and operationalization of a Single Licensing System. Setting up an Infrastructure Development Fund to further diversify sources of financing for infrastructure development. Increase the number of Social Cash Transfer beneficiaries to 700,000 in Full migration to an Electronic Social Cash Transfer platform. Increase beneficiaries under the Public Welfare Assistance Scheme to 200,000 from 134,000. Increase the number of household beneficiaries under the Food Security Pack programme to 80,000 from 40,000. Increase the number of learners on Home Grown School Feeding Programme to 1.5 million from 1.2 million projected at the end of ,000 women will be empowered under the Womens Development Programme with productive grants and micro credit countrywide in Provision of educational support to 16,000 girls from extremely poor households in 16 districts and a further 75,000 women with grants in 51 districts. PILLAR THREE: REDUCING DEVELOPMENT I US$200 million secured Roads under the rural con Ensure that finances req services and infrastructur level are de-concentrated Repealing and replacing councils gain revenue buo rates. This will go a long way in e for local authorities.

27 ADAPTED BY DGET INFOGRAPHIC OCTOBER 2017 Research and Analysis Department Design by Communications 2017 Policy Monitoring and Research Centre (PMRC) VE GROWTH WITHOUT LEAVING ANYONE BEHIND SUBSCRIBE NOW: REVENUE ESTIMATES 2018 BUDGET School Infrastructure K740.1 Million Domestic Financing K11.1 Billion Other Revenues K334 Million Student Loans and Scholarships K557 Million Total Foreign Grants and Financing Non- Tax Revenues K11.4 Billion K7.9 Billion University and College Infrastructure K321.9 Million s Development Fund 6.7 Million Customs and Excise Duties REVENUE ESTIMATES K8.1 Billion National Identity Documents K37.3 Million ZMW 71.6 BILLION Cli Defence K3.5 Billion 4.9% Income Tax xternal Debt Payment K7.3 Billion K20.3 Billion Value Added Tax K12.4 Billion Domestic Debt Payment K6.97 Billion ublic s lion Local Government Equalization Fund K1.1 Billion Zambia Revenue Authority K Million Constituency Development Fund K218.4 Million HIGHLIGHTS: REVENUE MEASURES Discontinuation of the 5-year income tax holidays that is facilitated through the Zambia Development Agency. Introduction of an excise duty of K2 per 50 Kg of cement to assist mobilization of funds for the Infrastructure Development Fund. Upward adjustment of the base tax rate from K150 to K365 per year. Upward adjustments of customs duty on unprocessed tobacco and tobacco refuse to 25 percent from 15 percent. Removal of customs duty on various inputs that are used in the manufacture of stock feed and fish feed. VAT Exemption on unprocessed and semi-processed tobacco ACT. Introduction of penalties in the VAT Act, Customs Act and Excise Act for taxpayers that fail to furnish records upon request and similarly for those who fail to issue tax invoices. Introduction of a surtax on selected imported products that are locally produced in order to support the growth of the domestic industry. ECTORAL POLICIES AND INTERVENTIONS MENT INEQUALITIES cured from the World Bank for Feeder ral connectivity project. es required to provide front-line public tructure projects at provincial and district trated to provincial administration. lacing of the Rating Act to ensure that ue buoyancy and adequacy from property way in establishing a sound financial base s. PILLAR FOUR: ENHANCING HUMAN DEVELOPMENT Construction and upgrading of health facilities across the country as well as procure modern equipment. Introduction of e-services in health institutions starting with the University Teaching Hospital. Increase access to, and improve quality of primary education through completion of schools under construction and rehabilitation of classrooms. With regard to secondary education, focus will be on the implementation of the two-tier system which offers learners with the opportunity to follow an academic or vocational career path way. Focus will also be on unbundling the arrears owed to the contractors and suppliers, in order to complete the ongoing water supply and sanitation projects. PILLAR FIVE: CREATING A CONDUCIVE GOVERNANCE ENVIRONMENT FOR A DIVERSIFIED AND INCLUSIVE ECONOMY Revisions to the Public Finance Act to make it more punitive to cases such as abuse of and misapplication of funds. Revisions to the Public Procurement Act to ensure value for money and introduce benchmarking of prices and requirements for project appraisal. Enactment of the Planning and Budgeting Bill to anchor the budget and planning preparations and enhance participation. Roll out the national land titling pilot programme with the aim of issuing title for at least 300,000 pieces of land. Repeal the Loans and Guarantees (Authorisation) Act with a bill that will provide for enhanced oversight by National Assembly over the borrowing activities.

28 This booklet is Zambia s 2018 Citizens' Budget. It is a simplified version of the proposed 2018 National Budget that was presented by the Honourable Minister of Finance on Friday 29 th September, The Citizens Budget explains how the Government proposes to raise money and where it intends to spend it, in a simplified manner that is easy for citizens to understand. You are, therefore, encouraged to read the Citizens Budget and if you have any comments, please contact your area Member of Parliament (MP) to raise the matter during the Parliamentary debates on the Budget, before it is approved by Parliament. You are also encouraged to listen to Parliament Radio to follow the debates by Members of Parliament (MP) on the proposed 2018 National Budget Design & Layout by PMRC MINISTRY OF FINANCE Budget Office P.O.Box Chimanga Road. Rideway, Lusaka Tel: Citizens' Budget