By Sunday Chanda
SOLUTIONS FROM THE OPPOSITION DESERVE INTERROGATING TOO
While the intention to improve incomes for workers is understandable, we must carefully assess the macroeconomic and fiscal consequences of removing 10 percent from PAYE collections and redirecting it to salaries.
First, in Zambia, PAYE is one of the most predictable and stable sources of domestic revenue. Diverting even a small portion of this revenue reduces Government’s capacity to fund essential public services such as healthcare, education, infrastructure, and social protection.
Second, this policy risks creating a permanent expansion of the public sector wage bill. Salaries are not one-off expenditures; they are recurring obligations. Once implemented, reversing them becomes socially and politically difficult, locking Government into long-term fiscal commitments.
Third, such a policy would directly affect fiscal planning undertaken by the Ministry of Finance and National Planning Zambia, which is currently working toward fiscal consolidation, debt sustainability, and maintaining investor confidence..
Fourth, macroeconomic stability considerations monitored by the Bank of Zambia require that wage growth be aligned with productivity growth. If salaries rise without corresponding productivity increases, the likely outcomes are inflationary pressure, erosion of real purchasing power, and possible exchange rate instability.
Fifth, from an investor confidence perspective, international markets closely observe fiscal discipline. Policies that appear to convert tax revenue into consumption expenditure without corresponding revenue replacement may be interpreted as weakening fiscal anchors, potentially increasing borrowing costs..
The responsible question is not whether we support workers, we must. The question is whether we support workers in a way that is sustainable, fiscally responsible, and protective of long-term economic stability
True and lasting salary growth must come from:
1. Economic expansion,
2. Productivity improvement,
3. Revenue growth,
4. And sustainable fiscal space, not from reallocating existing tax streams in ways that weaken the national budget.
I therefore urge citizens to carefully weigh the long-term fiscal risks against the short-term political appeal of this proposal.
Sunday Chanda