The United States Senate has voted in support of President Joe Biden’s $749 billion Inflation Reduction Act expected to rein in America’s over 40-year high inflation rate, support American families by reducing everyday energy costs and compel the richest corporations in America to pay their taxes.
Explaining the significance of the bill, the President said it will reduce the federal deficit by over $300 billion and cap seniors’ out-of-pocket spending on prescription drugs at $2000 a year, no matter what their drug bills would otherwise be, seniors citizens will not pay more than $2000.
Also, 13 million Americans presently under the Affordable Care Act, will save $800 on their health insurance premium a year.
“This bill tackles inflation by lowering the deficit and lowering costs for regular families,” President Biden declared.
Americans earning below $400,000 a year will not pay any new taxes while the wealthiest corporations will now be paying 15% on income, estimated at $40 billion in 2020. The bill will ensure America invests $369 billion in clean energy and addresses the climate crisis.
“It also gives consumers a tax credit to buy any electric vehicle or fuel cell vehicle, new or used, and a tax credit for up to $7,500 if those vehicles were made in America.
“This investment in environmental justice is real. It also provides tax credits that will create thousands of good-paying jobs — manufacturing jobs on clean energy construction projects, solar projects, wind projects, clean hydrogen projects, carbon capture projects, and more — by giving tax credits for those who build these projects here in America,” President Biden stated.
Speaking on the milestone, President Joe Biden said “I ran for President promising to make government work for working families again, and that is what this bill does — period.”
President Biden would be expected to sign the Act into law once the House of Representatives passed it.
Zambia’s Finance Minister Faces Dual Challenge in Upcoming Budget Address
As Zambia’s Finance Minister, Situmbeko Musokotwane, prepares to present the nation’s budget, he finds himself at a pivotal crossroads.
The second-largest copper producer in Africa is grappling with two pressing concerns: debt sustainability and soaring living costs.
Debt Restructuring Dilemma: Musokotwane’s foremost challenge is finalizing the $6.3 billion debt-restructuring deal with official creditors, led by China and France.
Delays have hindered disbursements from the International Monetary Fund (IMF) and left private creditors in limbo.
To reassure investors, a memorandum of understanding with the official creditor committee is urgently needed.
President Hakainde Hichilema emphasizes the importance of sealing these transactions to signal closure on this tumultuous chapter.
Plummeting Tax Revenue: The key copper-mining industry, which accounts for 70% of Zambia’s export earnings, is in turmoil.
First-half mining company taxes and mineral royalty collections have nosedived, adding to economic woes.
This, in turn, has depreciated the local currency, exacerbating imported inflation, particularly in fuel prices.
Rising Food Inflation: Musokotwane faces mounting political pressure to combat soaring living costs, with annual inflation reaching an 18-month high of 12%. Corn meal prices, a staple in Zambia, have surged by a staggering 67% in the past year.
Neighboring countries’ demand for corn has led to smuggling and further price spikes, raising concerns about food security.
Currency Woes: The kwacha’s value has been a barometer for the nation’s economic health. It depreciated by 16% since June 22, the worst performance among African currencies, reflecting the ongoing debt-restructuring uncertainty.
In his budget address, Musokotwane faces the daunting task of striking a balance between debt management, economic stability, and alleviating the burden on Zambia’s citizens.
The international community will keenly watch to see if his fiscal measures can steer the nation toward a path of recovery and prosperity.
IMF Urges Sub-Saharan African Nations to Eliminate Tax Exemptions for Fiscal Health
Sub-Saharan African countries have been advised by the International Monetary Fund (IMF) to tackle their fiscal deficits by focusing on eliminating tax exemptions and bolstering domestic revenue rather than resorting to fiscal expenditure cuts, which could hamper economic growth.
The IMF conveyed this recommendation in a paper titled ‘How to avoid a debt crisis in Sub-Saharan Africa.’
The IMF’s paper emphasizes that Sub-Saharan African nations should reconsider their overreliance on expenditure cuts as a primary means of reducing fiscal deficits. Instead, they should place greater emphasis on revenue-generating measures such as eliminating tax exemptions and modernizing tax filing and payment systems.
According to the IMF, mobilizing domestic revenue is a more growth-friendly approach, particularly in countries with low initial tax levels.
The paper highlights success stories in The Gambia, Rwanda, Senegal, and Uganda, where substantial revenue increases were achieved through a combination of revenue administration and tax policy reforms.
The IMF also pointed out that enhancing the participation of women in the labor force could significantly boost Gross Domestic Product (GDP) in developing countries.
The IMF estimates that raising the rate of female labor force participation by 5.9 percentage points, which aligns with the average reduction in the participation gap observed in the top 5% of countries during 2014-19, could potentially increase GDP by approximately 8% in emerging and developing economies.
In a world grappling with the weakest medium-term growth outlook in over three decades, bridging the gender gap in labor force participation emerges as a vital reform that policymakers can implement to stimulate economic revival.
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