The Millers Association of Zambia (MAZ) have appealed to government to remove Value Added Tax (VAT) on milling equipment to promote diversification in the sector.

However, the proposal was likely to be resisted as past incentives in the form of maize subsidies to millers were not transferred to Zambian consumers.

“The removal of import tax on milling equipment will increase investment in the milling sector and create more jobs,” said MAZ President Andrew Chintala.

Government, in its 2018 budget, proposed the removal of VAT on all agricultural machinery to raise sustainable productivity in the sector it has positioned as the engine for diversified growth. The proposal does not cover milling equipment or other capital goods.

Chintala said consideration should be given to extend the proposal to milling equipment. This will allow millers who concentrate on maize meal to diversify into processing crops like cassava, millet and sorghum.

But, several industry sources who spoke on condition of anonymity said the removal of VAT on milling equipment will not benefit consumers, but entrench the market share of selected millers with access to capital.

“This will adversely affect the degree of competitiveness within the milling industry. Many small-scale millers who play an important role in supplying affordable mealie-meal will be squeezed out,” said one source.

In the past, millers were criticised for not passing on the benefits, after maize subsidies were conferred on them. This emboldened critics of the sector, who cite the dismal returns on treasury’s costs in providing subsidies to millers.