‘New taxes could push up fertiliser prices’
By Ludia Ngwadzai
AGRICULTURE Climate Action Foundation has warned that proposed increases in corporate income tax for farming, agro-processing and fertiliser manufacturing businesses could raise production costs and undermine Zambia’s agricultural transformation ambitions.
Executive director Dr Oliver Kandela Bulaya said the proposed adjustment, which would increase corporate income tax for farming and agro-processing businesses from 10 to 15 per cent and fertiliser manufacturers from 15 to 20 per cent could discourage investment and make agricultural inputs more expensive.
In a statement issued yesterday, Dr Bulaya said the proposed tax changes could have far-reaching consequences not only for farmers but also businesses and consumers, particularly if fertiliser manufacturers transfered additional production costs to buyers.
“Higher taxation on fertiliser producers could increase manufacturing and supply costs, potentially resulting in higher fertiliser prices for farmers,” he said.
Dr Bulaya warned increased input costs would place more pressure on smallholder farmers, who were already facing considerable production expenses.
Higher taxes on farming and agro-processing businesses could affect profitability, expansion plans and employment creation.
Bulaya said the proposed changes could also undermine government’s ambitions of increasing annual maize production to 10 million metric tonnes, expanding soybean and wheat production and strengthening agro-processing.
He said Zambia needed a predictable and competitive tax environment to attract private-sector investment and accelerate value addition, industrialisation and agricultural exports.
“Ultimately, some of these additional costs could be passed on to consumers, contributing to higher food prices and undermining household purchasing power,” Dr Bulaya said.
He urged government to reconsider the proposed tax increases, particularly on fertiliser manufacturers, arguing that the country should instead introduce incentives to encourage domestic production.
Expanding local fertiliser manufacturing capacity could help Zambia achieve economies of scale, reduce dependence on imported fertiliser and improve the availability of agricultural inputs.
“It would be contradictory to encourage investment in expanding domestic fertiliser production while simultaneously introducing tax measures that could increase the cost of manufacturing and supplying fertiliser,” Dr Bulaya said.
