Addressing the Plight of Poor Households by Zero-Rating Value Added Tax on Basic Commodities In Namibia

Difficult economic times began for Namibia in 2008 as real economic growth suddenly dropped to 4.3 per cent from the 5.5 per cent recorded in 2007. There were also wide fluctuations in the general level of prices of goods and services, including food commodities. Cost-of-living inflation rose to a high of 10.4 per cent from a low of 2.3 per cent in 2003 and unemployment rates were high, well in excess of 50 per cent; thus many households faced an increasing cost of living without reliable sources of income. The unfavourable circumstances of these households were exacerbated by inauspicious climatic and soil conditions, which greatly limit the role of subsistence farming as a viable source of livelihood in many parts of the country. In order to mitigate the impact of rising food prices and address food security concerns, the government decided to increase from eight to fourteen the number of basic commodities (foodstuffs and services) that had zero-rated value added tax (VAT) in 2000, as a means of improving access to basic foodstuffs and services needed for daily survival, particularly for the poor. This paper offers an ex-ante analysis of how the zero-of rating VAT on these basic commodities affected the well-being of poor households. We use data from the 1993/94 and 2003/04 National Household Income and Expenditure Survey and a mini survey conducted in 2009 to determine the consumption patterns of these commodities. The VAT burden lifted is determined and disaggregated by income decile. The analysis reveals that, contrary to expectations, rich households are more likely to benefit from VAT zero-rating than poor households. The findings of the study make it plausible to conclude that the zero-rating of VAT on basic commodities in 2000 and 2008 did not adequately target the commodities that the poor consume in large quantities and that they acquire in formal markets; hence the measure is unlikely to bring additional benefits to the poor. The government might have to reconsider the choice of VAT zero-rated commodities and include those that are consumed mostly by the poor and acquired in formal markets, while simultaneously strengthening and expanding other schemes such as social transfers which would benefit the poor disproportionately. (...)Addressing the Plight of Poor Households by Zero-Rating Value Added Tax on Basic Commodities In Namibia

Addressing the Plight of Poor Households by Zero-Rating VAT on Basic Commodities in Namibia

Though it is classified as an upper middle-income country and has an estimated annual gross national income (GNI) per capita of US$4,210, Namibia still faces the twin problems of relatively high levels of poverty and high income inequality. Difficult economic times began in 2008 as real economic growth dropped to 4.3 per cent from a high of 12 per cent in 2004, while cost-of-living inflation rose to a high of 10.4 per cent from a low of 2.3 per cent in 2003. The rate of unemployment (broad definition) grew to 51.2 per cent. Thus many poor households faced a rising cost of living without reliable sources of income. Their already dire situation was exacerbated by inauspicious climatic and soil conditions, which severely limit the role of subsistence farming as a viable source of livelihood in the country. (?)Addressing the Plight of Poor Households by Zero-Rating VAT on Basic Commodities in Namibia

October, 2010 Working Paper number 72 Ojijo Odhiambo United Nations Development Programme, Namibia John E. Odada Department of Economics, University of Namibia. Addressing the plight of poor households by zero-rating value added tax on basic commodities in Namibia

Difficult economic times began for Namibia in 2008 as real economic growth suddenly dropped to 4.3 per cent from the 5.5 per cent recorded in 2007. There were also wide fluctuations in the general level of prices of goods and services, including food commodities. Cost-of-living inflation rose to a high of 10.4 per cent from a low of 2.3 per cent in 2003 and unemployment rates were high, well in excess of 50 per cent; thus many households faced an increasing cost of living without reliable sources of income. The unfavourable circumstances of these households were exacerbated by inauspicious climatic and soil conditions, which greatly limit the role of subsistence farming as a viable so urce of livelihood in many parts of the country. In order to mitigate the impact of rising food prices and address food security concerns, the government decided to increase from eight to fourteen the number of basic commodities (foodstuffs and services) that had zero-rated value added tax (VAT) in 2000, as a means of improving access to basic foodstuffs and servicesneeded for daily survival, particularly for the poor. This paper offers an ex-ante analysis of how the zero-of rating VAT on these basic commodities affected the well-being of poor households. We use data from the 1993/94 and 2003/04 National Household Income and Expenditure Survey and a mini survey conducted in 2009 to determine the consumption patterns of these commodities. The VAT burden lifted is determined and disaggregated by income decile. The analysis reveals that, contrary to expectations, rich households are more likely to benefit from VAT zero-rating than poor households. The findings of the study make it plausible to conclude that the zero-rating of VAT on basic commodities in 2000 and 2008 did not adequately target the commodities that the poor consume in large quantities and that they acquire in formal markets; hence the measure is unlikely to bring additional benefits to the poor. The government might have to reconsider the choice of VAT zero-rated commodities and include those that are consumed mostly by the poor and acquired in formal markets, while simultaneously strengthening and expanding other schemes such as social transfers which would benefit the poor disproportionately

Effects of zero rating value added tax on government revenue in Namibia A partial equilibrium analysis

Purpose – The Government of Namibia has traditionally used fiscal (especially tax) policy as an instrument for annual budget formulation. Marginal tax rates for profits and various income brackets have been changed back and forth in response to changes in economic conditions. However, to date, no attempt has been made to evaluate the effectiveness of these reforms in achieving the broad national economic goals, in general, and the potential effects on government revenue in the short, medium and long-run periods, in particular. The purpose of this paper is to fill this information gap by analysing the implicationof the 2008 zero-rating of value added tax (VAT) on basic commodities for aggregate demand and government revenue. Design/methodology/approach – The study uses an analytical framework based on economic theory which posits that in an open economy, which trades with the rest of the world, aggregate demand for goods and services is made up of consumption demand, investment demand, government demand and net exports and that real sector equilibrium is attained when aggregate supply of goods and services is equal to aggregate demand for goods and services. Findings – Using the Namibia Household Income and Expenditure Survey results, the annual loss in government revenue attributable to this policy is,ceteris paribus, estimated to be N$310.4 million. With a marginal propensity to consume out of disposable income of 0.89, total expenditure by households on goods and services is likely to increase by N$276.3 million per annum. In the medium-to-long-run, national income will have increased by N$303.9 million per annum. Taxes which are responsive to changes in the level of national income will have increased by N$85.7 million, compensating for just over one quarter of the estimated loss in government revenue of N$310.4 million. Research limitations/implications – The study has used a partial equilibrium model as opposed to computable general equilibrium model, which provides a consistent framework that meets most of the sectoral and institutional data requirements for the simple reason that a social accounting matrix which can be used readily to connect data from different sources, such as national accounts and household surveys and would thus have been ideal model for analysing the impacts of the VAT tax reform has not been developed for Namibia. Practical implications – The paper provides a number of practical policy options available for government including, but not limited to, increasing direct taxes, VAT rate on specific (luxury) goods and services and statutory VAT rate on all other commodities not zero-rated, other taxes such as taxes; and borrowing from external sources. Social implications – It is established that zero-rating VAT on all the basic commodities in 2008 reduces the VAT paid by all Namibian households by N$310.4 million per year, which represents the annual increase in the disposable income of all households. And with a marginal propensity to consume out of disposable income of 0.89, total expenditure by households on goods and services will increase by N$276.3 million per year

Stability of interferon-gamma and interleukin-10 responses to Plasmodium falciparum liver stage antigen-1 and thrombospondin-related adhesive protein in residents of a malaria holoendemic area

The stability of anti-malarial immunity will influence the interpretation of immunologic endpoints during malaria vaccine trials conducted in endemic areas. Therefore, we evaluated cytokine responses to Plasmodium falciparum liver stage antigen-1 (LSA-1) and thrombospondin-related adhesive protein (TRAP) by Kenyans from a holoendemic area at a 9-month interval. The proportion of adults with interferon-gamma (IFN-gamma) responses to 9-mer LSA-1 peptides was similar at both time-points, whereas responses from children decreased (P \u3c 0.05). Response to the longer, 23-mer LSA-1 peptide was variable, decreasing in adults and children over time (P \u3c 0.02 and P \u3c 0.001, respectively). The proportion of children with IFN-gamma responses to either antigen at the second time-point was significantly lower than that of adults, yet more adults responded to 9-mer TRAP peptides (P \u3c 0.02). In contrast, the proportion of interleukin-10 responses to LSA-1 and TRAP was similar at both time-points for both age groups. Most noteworthy was that even when the repeat cross-sectional frequency of cytokine responses was the same, these responses were not generated by the same individuals. This suggests that cytokine responses to LSA-1 and TRAP are transient under natural exposure conditions

Monocyte dysregulation and systemic inflammation during pediatric falciparum malaria

BACKGROUND: Inflammation and monocytes are thought to be important to human malaria pathogenesis. However, the relationship of inflammation and various monocyte functions to acute malaria, recovery from acute malaria, and asymptomatic parasitemia in endemic populations is poorly understood. METHODS: We evaluated plasma cytokine levels, monocyte subsets, monocyte functional responses, and monocyte inflammatory transcriptional profiles of 1- to 10-year-old Kenyan children at the time of presentation with acute uncomplicated malaria and at recovery 6 weeks later; these results were compared with analogous data from asymptomatic children and adults in the same community. RESULTS: Acute malaria was marked by elevated levels of proinflammatory and regulatory cytokines and expansion of the inflammatory intermediate monocyte subset that returned to levels of healthy asymptomatic children 6 weeks later. Monocytes displayed activated phenotypes during acute malaria, with changes in surface expression of markers important to innate and adaptive immunity. Functionally, acute malaria monocytes and monocytes from asymptomatic infected children had impaired phagocytosis of P. falciparum-infected erythrocytes relative to asymptomatic children with no blood-stage infection. Monocytes from both acute malaria and recovery time points displayed strong and equivalent cytokine responsiveness to innate immune agonists that were independent of infection status. Monocyte transcriptional profiles revealed regulated and balanced proinflammatory and antiinflammatory and altered phagocytosis gene expression patterns distinct from malaria-naive monocytes. CONCLUSION: These observations provide insights into monocyte functions and the innate immune response during uncomplicated malaria and suggest that asymptomatic parasitemia in children is not clinically benign. FUNDING: Support for this work was provided by NIH/National Institute of Allergy and Infectious Diseases (R01AI095192-05), the Burroughs Wellcome Fund/American Society of Tropical Medicine and Hygiene, and the Rainbow Babies & Children\u27s Foundation

Antibodies to pre-erythrocytic Plasmodium falciparum antigens and risk of clinical malaria in Kenyan children

BACKGROUND: IgG antibodies to pre-erythrocytic antigens are involved in prevention of infection and disease in animal models of malaria but have not been associated with protection against disease in human malaria. METHODS: Levels of IgG antibodies to circumsporozoite protein (CSP), liver-stage antigen type 1 (LSA-1), and thrombospondin-related adhesive protein (TRAP) were measured in 86 children in a malaria-holoendemic area of Kenya. The children were then monitored for episodes of clinical malaria for 52 weeks. RESULTS: Children with high levels of IgG antibodies to CSP, LSA-1, and TRAP had a decreased risk of clinical malaria (adjusted hazard ratio, 0.29; 95% confidence interval 0.10-0.81; P = .02), a lower incidence of clinical malaria (P=.006), protection from clinical malaria with a parasite level of \u3e or =4000 parasites/microL (P= .03), and a higher hemoglobin level at enrollment (P= .009), compared with children with lower antibody levels. Protection against malaria morbidity was associated primarily with antibodies to CSP and LSA-1. CONCLUSIONS: Kenyan children with high levels of IgG antibodies to the pre-erythrocytic antigens CSP, LSA-1, and TRAP have a lower risk of developing clinical malaria than children without high levels of these antibodies. The decreased risk of clinical malaria may be mediated in part by prevention of high-density parasitemia

Correlation of high levels of antibodies to multiple pre-erythrocytic Plasmodium falciparum antigens and protection from infection

High levels of antibodies to multiple antigens may be more strongly associated with protection from infection than antibodies to a single antigen. Antibody-associated protection against Plasmodium falciparum infection was assessed in a cohort of 68 adults living in an area of holoendemic malaria in Kenya. Antibodies to the pre-erythrocytic antigens circumsporozoite protein (CSP), liver-stage antigen-1 (LSA-1), thrombospondin-related adhesive protein (TRAP), and blood-stage antigens apical membrane antigen-1 (AMA-1), erythrocyte binding antigen-175 (EBA-175), and merozoite surface protein 1 (MSP-1) were tested. Peptides were used for CSP (NANP repeat) and LSA-1 (central repeat), and recombinant antigens were used for TRAP (aa D(48)-K(394)), AMA-1 (ectodomain, non-glycosylated), EBA-175 (non-glycosylated), and MSP-1 (MSP-1(19)). Weekly microscopy testing for P. falciparum infection was performed over a 12-week period after drug-mediated clearance of P. falciparum parasitemia. Individuals with high levels of IgG antibodies (\u3e 2 arbitrary units) to CSP, LSA-1, and TRAP had a 57% decrease in the risk of infection (95% confidence interval = 20-77%, P = 0.016). This decreased risk remained significant after adjustment for age, prior parasitemia, bed net use, sickle cell trait, and village of residence. In contrast, protection against infection did not correlate with high levels of IgG antibodies to blood-stage antigens or IgM antibodies to pre-erythrocytic or blood-stage antigens. High levels of IgG antibodies to CSP, LSA-1, and TRAP may be useful immune correlates of protection against P. falciparum infection in malaria-endemic populations

Broadly reactive antibodies specific for Plasmodium falciparum MSP-119 are associated with the protection of naturally exposed children against infection

BACKGROUND: The 19 kDa C-terminal region of Plasmodium falciparum Merozoite Surface Protein-1 is a known target of naturally acquired humoral immunity and a malaria vaccine candidate. MSP- 119 has four predominant haplotypes resulting in amino acid changes labelled EKNG, QKNG, QTSR and ETSR. IgG antibodies directed against all four variants have been detected, but it is not known if these variant specific antibodies are associated with haplotype-specific protection from infection. METHODS: Blood samples from 201 healthy Kenyan adults and children who participated in a 12-week treatment time-to-infection study were evaluated. Venous blood drawn at baseline (week 0) was examined for functional and serologic antibodies to MSP-119 and MSP-142 variants. MSP-119 haplotypes were detected by a multiplex PCR assay at baseline and weekly throughout the study. Generalized linear models controlling for age, baseline MSP-119 haplotype and parasite density were used to determine the relationship between infecting P. falciparum MSP-119 haplotype and variant-specific antibodies. RESULTS: A total of 964 infections resulting in 1,533 MSP-119 haplotypes detected were examined. The most common haplotypes were EKNG and QKNG, followed by ETSR and QTSR. Children had higher parasite densities, greater complexity of infection (\u3e1 haplotype), and more frequent changes in haplotypes over time compared to adults. Infecting MSP-119 haplotype at baseline (week 0) had no influence on haplotypes detected over the subsequent 11 weeks among children or adults. Children but not adults with MSP-119 and some MSP-142 variant antibodies detected by serology at baseline had delayed time-to-infection. There was no significant association of variant-specific serology or functional antibodies at baseline with infecting haplotype at baseline or during 11 weeks of follow up among children or adults. CONCLUSIONS: Variant transcending IgG antibodies to MSP-119 are associated with protection from infection in children, but not adults. These data suggest that inclusion of more than one MSP-119 variant may not be required in a malaria blood stage vaccine

Topography and malaria transmission heterogeneity in western Kenya highlands: prospects for focal vector control

BACKGROUND: Recent resurgence of malaria in the highlands of Western Kenya has called for a more comprehensive understanding of the previously neglected complex highland vector ecology. Besides other drivers of malaria epidemiology, topography is likely to have a major effect on spatial vector and parasite distribution. The aim of this study was to determine the effects of topography on malaria spatial vector distribution and parasite prevalence. METHODOLOGY: Indoor resting adult malaria vectors and blood parasites were collected in three villages along a 4 km transect originating from the valley bottom and ending at the hilltop for 13 months. Members of the Anopheles gambiae complex were identified by PCR. Blood parasites were collected from children 6–13 years old and densities categorized by site of home location and age of the children. RESULTS: Ninety eight percent (98%) of An. gambiae s.s. and (99%) Anopheles funestus were collected in houses located at the edge of the valley bottom, whereas 1% of An. gambiae s.s. were collected at mid hill and at the hilltop respectively. No An. funestus were collected at the hilltop. Malaria prevalence was 68% at the valley bottom, 40.2% at mid hill and 26.7% at the hilltop. Children aged six years and living at the edge of the valley bottom had an annual geometric mean number of 66.1 trophozoites for every 200 white blood cells, while those living at mid-hill had a mean of 84.8, and those living at hilltop had 199.5 trophozoites. CONCLUSION: Malaria transmission in this area is mainly confined to the valley bottom. Effective vector control could be targeted at the foci. However, the few vectors observed at mid-hill maintained a relatively high prevalence rate. The higher variability in blood parasite densities and their low correlation with age in children living at the hilltop suggests a lower stability of transmission than at the mid-hill and valley bottom