MY BUDGET SUBMISSION
By Dr Lubinda Haabazoka
PAYE a cry for the Zambian worker
I know budget submissions are done formally on a paper and submitted to the ministry of finance but since they read my posts, I will make use of my page widely.
I have for a long time argued that for a developing country like Zambia, Personal income tax is extremely high. In an era where the government is trying to promote entrepreneurship and wealth creation, the best way to collect tax is through Value added tax since everyone regardless of the sector they are in formal or informal, employed or unemployed pays vat at the point they consume goods and services.
The most developed country in Africa Mauritius has Personal tax pegged at only 13%. In most countries, citizens are allowed to take home a fair share of their income home but part away with some of it in the consumption stage.
For argument’s sake, a person who gets k100,000 today walks home with only about k65,000! Then when they go to the store, they give GRZ another 16% and even more if goods or services consumed have VAT! Now with this background, saving becomes a big problem there hindering investments because the source of investment is savings.
For a long time, our employees have been denied the opportunity to build, and start small businesses because of PAYE.
This government made a progressive move of reducing company income tax from 35% to 30%! In the long run, this saving will lead to business growth and job creation there generating even more tax income for GRZ.
So in next year’s budget, I propose that we introduce a flat PAYE at 20%! High-income earners are not in the majority so the loss will be minimal but the gains will be more as maids, bricklayers and others will be employed helping in job creation. Small businesses that will be created will also contribute to GDP!
A lot of people will argue that GRZ might lose revenue and therefore I propose to increase VAT to 18% from 16%. I also propose that we improve on VAT administration to avoid leakages, therefore, equalising revenue forgone from PAYE reduction.
This bold move by the government will see us improve the livelihoods of citizens. Because of our African dependent system, even those unemployed but dependent on a working relative will benefit and the government will still tax them at the consumption stage.
Am very aware that colleagues at the ministry of finance have a model to analyse the impact of such a measure.
In future, we should target 13% PAYE. We shouldn’t worry about inflation or revenue loss. GRZ will capture this revenue through customs duty, VAT and excise duty.
I submit my proposal as a citizen
Thanks 🙏🏿