The Zambia Congress of Trade Unions (ZCTU) has proposed a reduction in Pay As You Earn (PAYE) in the 2020 national budget.

ZCTU deputy secretary general Elastone Njovu has further called on Minister of Finance Dr. Bwalya Ngandu to consider increasing the PAYE exempt threshold from K3,100 to K5,000 in next year’s budget.

In an interview, Njovu said the government would do well to cut PAYE as Zambian workers are subjected to many taxes.

“A Zambian worker is subjected to too many taxes. We have been saying the Zambian government should broaden the tax base and give relief to people who are in formal employment, the public service workers, the civil servants and those in the private sector who are in formal jobs. You find the informal sector is taxed but Zambia Revenue Authority ZRA hasn’t managed to get tax that is due to government when it comes to the informal sector,” Njovu said.

“We would like to see a reduction [in PAYE] because you know, a Zambian worker is paying up to about 37.5 per cent in terms of Pay As You Earn, and if you do the mathematics, that leaves someone with 62.5 % as take home pay but the same amount is subjected to statutory obligations like pensions, medical schemes, then you have issues of Value Added Tax (VAT) which comes on a daily basis as you consume services. So in the end, a Zambian worker really has less than 40 per cent which we can call disposable income after all these taxes.”

He proposed that PAYE should be reduced to 20 per cent as the current economic situation is not healthy for a Zambian worker to survive high taxes.

“And then there is the issue of tax on daily basis either through the toll gates and we were interrogating the economic situation in the country. You know, it is not healthy for a Zambian worker and let alonee or worst still, it is not very healthy for people who are not even in employment. So we would like to see a situation where the PAYE is actually reduced to as much as 20 per cent as the [highest] threshold,” Njovu added.

And Njovu said the current economic situation should necessitate an increase in the PAYE exempt threshold to K5,000.

“You know, there is a minimum tax exempt threshold which is about K3,100, meaning that if a worker is earning K3,100, that is a benchmark that means they will not pay tax and we were proposing that this amount goes to K5,000. So anyone in this country who is earning [up to] K5,000 must not be taxed, must not pay PAYE. They can go and pay the other things like VAT, which you are aware they would like to change it and replace it with sales tax. But at least, let a Zambian worker who is getting K5,000 not pay any tax and they can meet the sales tax along the way as they access goods and services,” he appealed.

“Now we say K5000, the reason is not just that we are dreaming about this. The Jesuit Center for Theological Reflection (JCTR) do a food basket. Now in that research which government has actually come to appreciate and embrace…the food basket on average here in Lusaka is…K5000. So basically, that is our basis for saying ‘look, let us have K5,000 as non taxable income’.”

He further asked the government to change its approach in taxing mines in the country.

“On the mining tax, government needs to re-look at the way mines are being taxed. You know, there have been talks of mineral royalty tax… hose are big issues that they really need to sit down with the investors so that the investor is not disadvantaged but also that we, as Zambians who are the owners of this God-given copper, do not go away empty handed,” said Njovu.

“If I go to Saudi Arabia, I can see how the God-given oil is benefiting the Saudis. But when you come to Zambia, you cannot actually point a finger to say that this is how our copper has benefited Africans, which is a shame, isn’t it? It means there is something wrong which our leaders our doing in the way they sign contracts with [big] investors. There is something seriously wrong; we see loads and loads of copper being [taken] out of the country but where are the benefits and the social amenities?”