By BENSON WITIKA
THE Private Sector Development Association (PSDA) says the imposition of foreign exchange controls by the government will promote the growth of a foreign exchange black market.
PSDA chairperson Yusuf Dodia said the creation of laws and regulations will exert pressure on businesses on how they should transact and result in the flourishing of the black market.
Mr Dodia said this in an interview in Lusaka recently.
“We need to recognise that in a free market economy, if we create laws that will force businesses to keep money in a certain way or restrict transactions, this will in no time allow the succession of black markets,” he said.
He said the liberalisation of the foreign exchange market and elimination of capital controls can undermine the economic logic favouring black markets trading, which is contrary to what the amendment of the Bank of Zambia Act is trying to do.
Black markets involve trading in violation of publicly-imposed regulations such as rationing laws. This is where laws against certain goods, and official rates of exchange among currencies activities, may consist of charging more than the legal prices, stealing or counterfeiting ration currency, and making side payments in addition to the official rate to obtain a given amount of merchandise.
Mr Dodia said Government should try to critically pay close attention to other viable means of compelling investors to pay taxes that are required of them, such as coming up with tax schemes and to strengthen the operations of the Zambia Revenue Authority (ZRA), as this is where loopholes appear to exist.
“Instead of causing legitimate businesses to resort to the black market trading, the State should look at how the ZRA can be strengthened such as through formulating schemes that target big corporate businesses such as Zambia Sugar Plc to pay tax, consequently other smaller businesses will follow.
“There is need for the State to create an enticing environment for businesses to compete, thereby promoting ‘efficiency’ for the benefit of the consumer and not try to solve problems which are ideally caused by the weakness of responsible departments by legislation,” he said.
162 total views, 2 views today