Increase tax-free threshold, demands 15 CSOs

The Zambia Tax Platform (ZTP) says payment of tax has become burdensome to many Zambians and that people’s personal incomes are being devoured by the many taxes that government was demanding.

ZTP is a consortium of 15 civil society organisations which Action Aid Zambia, Centre For Trade Policy and Development (CTPD), Consumer Unit and Trust Society (CUTS), Caritas Zambia, CSO SUN (Civil Society for Scaling Up Nutrition), Green Life Conservation of Zambia, Jesuit Centre for Theological Reflection (JCTR) and Civil Society for Poverty Reduction (CSPR). Other members are Young Volunteers for the Environment, The Non-Governmental Organisations’ Coordinating Council (NGOCC), Diakonia, Zambia Council for Social Development (ZCSD), Save the Children Zambia, Transparency International Zambia (TIZ) and Economics Association of Zambia.

In a statement yesterday, ZTP chairperson Lewis Mwape called on government to consider increasing the tax free threshold on income earners to enable citizens pay the different taxes they are mandated to pay and also meet their basic needs.

“ZTP is concerned about the high taxes citizens are paying in Zambia. While noting that the government plans on expanding the tax base domestically, which is a welcome move, there is need to ensure that local revenues are raised in a progressive manner. Personal incomes are highly eroded due to the many taxes, levies and fees that the government is collecting. Currently income earners getting above K5, 900.00 are subjected to Pay As You Earn (PAYE) as high as 37.5 per cent. Withholding taxes, road taxes, social security taxes and other different levies and fees are leaving citizens with very little disposable income which is negatively impacting savings and investments in the country,” Mwape stated.

“Other taxes we are subjected to include excise taxes on key commodities such as electricity, fuel and talk time. There is need to balance the need to protect the most vulnerable in our society with the need to increase revenue locally. ZTP wishes to emphasize that there is a lot of potential in the country to reap more benefit from our natural resources and it is in this area that we urge the government to focus its energy. The current policy direction is that resources need to be mobilized locally and therefore government should focus on collecting the right amount of taxes from those who are more capable of paying such, such as multinational companies.”

Mwape also called on government to start revising all tax treaties that it has signed with other countries in order to collect more from their investments in the country.

“Zambia has signed 23 double taxation agreements with different countries and due to some of the provisions that exist within them, there are opportunities for tax avoidance. Action Aid revealed how through one treaty alone US$7.4 million was not collected by government through tax avoidance mechanisms of one firm. This simply shows the potential that government can collect if these treaties are revised. Furthermore, there are numerous tax incentives that are offered to investors which may be unnecessarily eroding the tax base because investors are still willing to invest in the country regardless of these incentives. However, Multinational companies attain incredible benefits from investing in Zambia. A number of investment perception surveys have revealed that factors such as infrastructure and access to markets are more important to attracting foreign direct investments than tax incentives,” he stated.

“Glencore alone which owns Mopani mine on the Copperbelt made revenues of US$152.948 billion in 2016 which is almost seven times the GDP of Zambia. Its subsidiary Mopani Mine according to the 2015 Extractive Industry Initiative reports paid to the government K1.214 billion a simple indication that these multinational corporations have the capability to invest in the country and remit taxes to the government if there are proper market conditions and not tax incentives.”

Meanwhile, Mwape stated that ZTP had rejected the declaration to make Livingstone a tax free zone to attract tourism investment, saying the move would lead to loss of significant revenues.

“We condemn the declaration to make Livingstone a tax free zone because significant revenues will be lost at a time when Zambia needs tax money to pay back its accumulated debt stock. We urge the government to minimize the burden on lower income groups to increase revenues domestically. Whilst government is trying to devise new tax mechanisms, there is need to exercise caution that too many taxes have the potential to worsen poverty as more people cannot afford to live on their incomes, hence the poverty rate increases,” stated Mwape.

“The situation is even worse for the most vulnerable in society including women who are highly represented among low income earners and represent about 80 per cent of those living in poverty. According to the Jesuit Centre for Theological Reflection’s (JCTR) most recent basic needs basket, K5, 229.00 is required per month for basic needs for a family of five in Lusaka.”

         

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