PARTY for National Unity and Progress (PNUP) leader Highvie Hamududu says dictating a Pay As You Earn (PAYE) threshold creates room for tax evasion because employers just decide to reduce salaries.
And Hamududu has observed that those who pay tax are overburdened in Zambia.
In an interview, Hamududu said a better revenue generation method for government would be to lower taxes and get everyone to pay.
“The issue is that at national level, the Minister is losing out, at the same time we need money to provide services for the poor people, to provide for student loans. Therefore, it is an issue that we need to discuss without emotions. If you are earning K3,000 and I pay you K2,955 is there any difference? So this government is losing. Even when you put the PAYE threshold, it becomes an opportunity for tax evasion because what people will do is that you will just lower the salaries, if they are getting on the border line. Now it is K4,500, so they would rather reduce the salary so that you escape the tax and you go home with more money. So that borderline creates room for tax evasion,” he said.
“Therefore, the issue of tax is something that we should have a conversation about and look at the numbers. That money raised could have been used to go and provide better education, better health. The idea is that we need to have lower taxes but everyone must pay, it is called broadening the tax.”
And Hamududu said those who paid tax were overburdened.
“The percentage of tax band is extremely high, but you can only reduce the rate at every band if everyone pays. As long as everyone does not pay, the few who pay tax will always carry a very heavy burden. They should be talking about what rate should we tax the people at the bottom. Let’s say you earn K1,000 and you pay 2.5 percent, so you are basically saying a K25, you go home with K975. Is there a difference between K975 and K1,000 at an individual level? It then goes further that with formalisation of the economy, literally everyone should pay. If you have one million people across the country just for example paying K50 how much money is that? That is K150 million. These are things that we should have conversations about. So it takes two tangle,” said Hamududu.