Increment on beer and airtime bad

By Chomba Mwenya

I wish to pass my personal opinion on the recent tax increments which our government leaders recently implemented on clear beer and airtime as an affected citizen of the republic of zambia.

Firstly I will start with the taxes on airtime.

One does not need to have a university degree to understand that communication is an important aspect in the development process of any economy. Countries in the west, middle east and asia have made it accessible and
affordable because they understand the role it plays in research and technological development.

As in the case for our country Zambia, we have opted to increase the tax and inturn making it expensive for the
average citizens. The increments in the tax on communication has many negative impacts despite it have a positive impact of increasing revenue for thegovernment,and some of these many negative may be outline as follows;
The tax increment will make the already costly research projects more
expensive than they are.

Speaking from a point of a student has to spend money(airtime/bundles) to work on a project that needs certain
cardinal information from the world wide web,this will be a limitation towards the research as financial resources will not make it possible for some information to be extracted from the internet as a result of increase in consumer price for airtime. As a result of this tax increment,the country will move a step backwards in research and
technological advancement.

The tax treatment of telecommunications goods and services sometimes reflects the out-dated view that communications services should be taxed as luxuries affordable only by the rich – rather than as
essential services for all, which they are today.

Because telecommunications taxes often have the most stifling impact on the low income consumers who represent the greatest opportunity for achieving universal adoption of mobile broadband, these taxes are
directly inconsistent with both Millennium Development Goals and the public policy.

High taxes on communications services frustrate efforts to increase telecommunications service deployment by raising consumer prices and reducing demand for these services.Reductions in consumer demand
reduce the cash flows available for investment in the build-out of
telecommunications networks and the development of new services.

In the case of reduced demand as people respond to the increase in prices,the cash flows for the telecommunication firms will also reduce.

The may in turn have a negative impact on employment as the firms may opted to cut off their labour force because the net profits will have reduced.

Secondly I will have may opinion on the tax increment on clear alcohol.Tthe motive to increase the already expensive alcohol in zambia and the most expensive in southern africa may be clear known as to weather reduce the consumption or other reasons better known to the
policy makers. As already noted this may have a positive impact, but
there are some negative impacts which may be but not limited to;

The increase in tax will increase the prices which may reduce the demand, and reduced demand will reduce sales which reduce cash flow and  profit margins. This effect may start with people switching from
the high priced alcohol to low price alcohol or reducing the consumption to the amount of the available purchasing power of the disposable income.the will be transferred to retailers who will experience low sales and profits,and inturn the retailer will make less order from the distributors who will as a result make less orders
from the brewers. The reduction in demand and sales will have an effect on employment as retailers will lay off the extra sales man/lady,the distributor will lay off the extra transporters and sales man/lady and the brewers will lay off some worker with different skill in different departments.

It should be noted that increasing tax on alcohol does not reduce the consumption as consumers have a choice of switching to less expensive alcohol.

With this,it can clearly be said that the tax burden is ultimately on the low income earners and its has a negative impact on employment. We don’t need a telescope to see that our  policy maker who increase these taxes enjoy the privilege of tax free consumer goods while we poor zambias pay the tax.

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