BUSINESS QUERIES LATEST GOVERNMENT SUBSIDIES

The Confederation of Mozambican Business Associations (CTA) has queried the feasibility of the government’s latest measures to alleviate the cost of living for the poorest strata of urban society.The most significant of these measures are the provision of a basket of subsidised foodstuffs for anyone with a monthly income of less than 2,500 meticais (82 US dollars), and subsidised transport passes for workers and students.Since the food basket is supposed to be introduced in June, the government has about a fortnight left to register the estimated 1.8 million people eligible in Maputo and the other ten provincial capitals. The CTA, in a document cited in Thursday’s issue of the independent daily “O Pais”, warns that this deadline is impossible, and will overload the municipal authorities, diverting them from other activities. The CTA fears that the cost of the registration will be greater than the cost of the food subsidy itself.One of the requirements for beneficiaries of the food basket is that they should each have a tax number (NUIT). Most of the urban poor pay no tax and have no tax number, and the CTA argues that it will be impossible to allocate a NUIT to 1.8 million people in 15 days.The CTA suggests replacing the NUIT with the identity card of the beneficiaries. However, not everyone has an identity card – and it takes longer to acquire an identity card, which is a biometric document, requiring a photograph and fingerprints, than it does to allocate a NUIT, which is simply a number.The government manual for implementing the food basket mentions fixing maximum profit margins for the shops that will sell the subsidised food. The CTA is opposed to anything that smacks of administrative prices. It makes the unsubstantiated claim that “administrative prices immediately affect market balance, which always provokes a reduction in supply and pushes transactions onto the black market”.“Controlling profit margins or prices is a well-known impossibility in Mozambique”, the CTA claims.It also suggests that the subsidy – the difference between the reference price of the food basket and its market price – should be paid to the shops involved via a commercial bank. This would be “rapid, efficient and secure, with reduced logistical costs and ease in controlling the disbursements made by the state to the shops”.The CTA also objects to the government proposal that employers should pay 25 per cent of the subsidised transport pass, since no agreement has been reached about how this money would be paid. Even if this contribution can be deducted against corporation tax, it will still be an additional cost for companies – for they would have to pay the 25 per cent at once, and only recover it after the end of the fiscal year.In any case, the CTA argues, few companies have any profit at the end of the financial year, and so will not pay corporation tax. Thus it would be impossible for companies to recover their contribution to the transport subsidy from deductions against taxes paid. If the transport subsidy merely adds to employers’ costs, this would simply push prices up, the CTA claims.