The Indaba Agricultural Policy and Research Institute (IAPRI) says grain levies imposed by local government authorities are making the agricultural sector noncompetitive. “Grain levies have a negative impact on farmers as they push the cost of production up,” says IAPRI in a white paper on making agriculture more competitive.
The levy taxes anyone transporting crops from one district to another. The charges are pegged at K0.90 for a 50kg bag and K0.45 for a 25kg bag. Proponents of the tax argue that taxing agriculture increases revenue for government, making it more desirable to drive development.
But IAPRI counters that the tax places a heavy burden on producers whose fuel and electricity subsidies have already been scrapped. “The levies are counterproductive to increasing productivity and poverty,” said IAPRI.
The think-tank says the tax will further hurt prospects of exporting grain to lucrative East African markets.
Zambia has a bumper harvest this year, enough for domestic use and export. However, logistical challenges, including the high cost of transport and the recent appreciation of the kwacha, are hampering grain exports.
Officials in the Ministry of Local Government and Housing say grain levies are still in force and councils are obliged to collect them.
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