By Angela Moonga
Secretary to the Treasury Felix Nkulukusa says despite growth being reported in many sectors of the economy the revenue to GDP ratio has remained sluggish over the years.
Speaking yesterday during the launch of the commencement of public consultations on the Medium-Term Revenue Strategy for the period 2027 to 2031, Nkulukusa bemoaned the revenue to GDP ratio, which he said had remained sluggish over the years.
He said on the other hand, persistent climate, health, economic and geo-political shocks had resulted in a decline in support from cooperating partners and overborrowing was no longer an option that is on the table.
”The recently attained debt restructuring itself requires that Zambia maintains strong and predictable domestic revenue performance to meet our debt obligations and maintain the international credibility that we have fought hard to regain in the last 5 years,” Nkulukusa said. “We are entering a new political and economic cycle, with a renewed Government mandate and strong public expectations around economic management, fiscal credibility, and development delivery. This is a moment to move from short-term responses to medium term fiscal strategy.”
He said in trying to balance the need to create a favourable environment for entrepreneurship, investment and business growth with the need to finance public service provision and investments the government had revised the tax system frequently and openly with constant input for all.
”We have responded to various Captains of Industry and have given tax relief and incentives in most priority sectors in the country. The 2023 and 2024 tax expenditure reports attest to the full extent of Government effort to ease and incentivise investments through the tax system reporting tax expenditures amounting to between1.5 and 2 percent of GDP. This represents an average of 10 Billion Kwacha foregone in two years to stabilise business and spur economic growth,” Nkulukusa said. “Despite this effort we continue to note with concern sentiments of inequality, complexity and unfairness in the tax system from all segments of the private sector and business. We also note the low levels of tax compliance, reports of smuggling and large-scale tax avoidance and evasion.”
Nkulukusa said the government launched the commencement of public consultations on the Medium-Term Revenue Strategy, providing them with an opportunity to relook at the way the country mobilised and manages its public resources.
”Let me be very clear. The Medium-Term Revenue Strategy is not simply about identifying new taxes or increasing the tax burden. This is not another tax increase exercise. Rather, it is about building a better revenue system: one that is broader, fairer, more predictable, more transparent and more supportive of growth. Essentially, it is a partnership to build a revenue system that can sustainably finance our National Development Plan without over relying on unsustainable borrowing.
It is important to distinguish this exercise from our regular fiscal routines. The annual budget process addresses immediate fiscal needs. The Medium-Term Revenue Strategy looks beyond one fiscal year and asks what kind of revenue system Zambia needs over the medium term, in this case, over the next 5 years,” Nkulukusa said. “As you may be aware, Zambia’s fiscal framework continues to face significant expenditure pressures stemming from structural development needs, high debt service obligations, and growing demands for public services. While fiscal consolidation has helped stabilize public finances, the medium-term expenditure needs remain substantial and will require sustained improvements in domestic revenue mobilization.”
He said the success of the strategy hinged on partnership, and the government was inviting people to contribute to a structured reform process.
”We are asking you to help identify problems, provide evidence, and propose reforms that can strengthen Zambia’s revenue system over time. This is a Government led process, but it is a process that relies on collective national effort,” Nkulukusa said. “The five-year horizon of the Medium-Term Revenue Strategy is a significant advantage. It gives all of us an opportunity to raise issues that cannot be solved within a single budget cycle, but which matter for investment, formalisation, compliance, fairness and long-term economic growth. We can now address structural challenges systematically rather than piecemeal.”
He said to ensure that inputs were robust, evidence based and useful for policy decisions, stakeholder proposals will be submitted through guidelines and a structured template that will be provided.
He said they would be assessed through a clear appraisal framework that will be coordinated by the technical committee on the Medium-Term Revenue Strategy.
”This is to ensure that we build a strategy grounded in evidence and practical feasibility. We want actionable solutions, not just general opinions and endless talk shows. Let me stress one more point colleagues: revenue mobilisation cannot be separated from development priorities, expenditure quality and public trust. The Medium-Term Revenue Strategy is part of our broader public finance management reforms. It will help Government strengthen the link between what we collect and what we deliver to the Zambian people. This is about securing the fiscal space needed to finance our National Development Plan,” Nkulukusa said. “Finally, Ladies and Gentlemen, let me conclude by stressing that the success of the Medium-Term Revenue Strategy will not depend only on the measures it contains. It will also depend on whether Zambia can build a stronger fiscal contract between Government, taxpayers, businesses and citizens.”
He said with sufficient and stable domestic revenues, the country ran the risk of falling back into debt distress and destabilising the economic fundamentals that were essential for business development and growth.
”Without sufficient revenues we will not be able to fund Government service delivery and run the risk of citizens continuing to be isolated from Government systems and procedures. Without equitable and fair revenue collections the social contract between Government and citizens will remain broken,” said Nkulukusa. “Let us seize this moment. Let us build a revenue system that serves Zambia’s development ambitions. I believe that this revenue system is attainable and sustainable.”
