THE Zambia Congress of Trade Unions (ZCTU) has insisted that government should have increased the Pay As You Earn (PAYE) threshold to K8,000 in view of the high cost of living.
In an interview, ZCTU president Chishimba Nkole said the union would have loved it if government had considered its earlier proposal of increasing the exemption threshold to K8,000.
“ZCTU takes into account other factors of the budget presentation. We said generally that we accept the budget in its totality. Though we may have some reservations somewhere. But much as we may appreciate the rise from K4,000 to K4,500 of the tax-exempt threshold, we would have loved it to be where we proposed it to be, because ZCTU proposed K8,000. And the reason for proposing K8,000 was that, according to Jesuit Centre for Theological Reflection (JCTR) and also the Central Statistics Office (CSO), the food basket survey that was carried out indicates that it is above K8,000. So that is where we based our argument. Because even the poverty datum line also indicates that it must be above K8,000,” he said.
“So that is the reason because we might have been accused of having made the proposal out of the blues, no! I think the public must understand that whenever we are making proposals, we need to look at the poverty datum line as well as what the JCTR and the Central Statistics are telling us because they carry out the food surveys. So that means if we are talking about the concept of the poverty datum line, it means that that level must be exempted from tax.”
Nkole urged parliamentarians to consider the poverty datum line as well as the food basket survey as they debate the budget in Parliament.
“Most of the times when the budget is presented like that, it’s very rare that a lot of things change after the debate in Parliament. We will still expect it to come out as K4,500. That’s why we are saying that much as it is that way, we would have expected the parliamentarians to consider why institutions like ours proposed K8,000. So we are still saying that they should consider the poverty datum line as well as the report of the food basket survey by the Central Statistics as well as the JCTR. That should be there just as a benchmark and also as an authority which actually goes practically to see what is in the market,” he said.
He also called on government to consider reducing the tax bands so that people could get some relief.
“What we need to do is to ensure that government starts broadening the tax base, especially the informal sector. The informal sector comprises more workers than even the formal sector. So all the burden of the tax has been only about 10 percent of the workforce in Zambia which is in the formal sector. So that has always been the problem. So for this government to succeed in terms of taxing workers, they must make sure that they find a system of taxing the informal workers and then that is going to compensate and eventually we shall be able to enjoy a better tax exempt threshold,” said Nkole.
“Another thing is that the tax bands, you know that it does not only end at K4,500, which is the tax exempt threshold. It goes on also to talk about the tax bands which start from, I think that should be about 25 percent and then going all the way up to about 37 percent. We have also been proposing that under the current circumstances where they are not taxing the informal sector, they are also supposed to reduce the percentages in the other tax bands which follow the tax exempt threshold. The tax bands need to be reduced as well so that people somehow get some relief. It will not be a complete relief but just some mitigation.