The National Restoration Party like any other party and citizens expect a more robust 2017 national budget that will focus more on reduction in expenditure which will result in more cost saving measures that will finance the many sectors of the economy. By this we mean all unnecessary expenditure like buying of soccer tickets should come to an end as many other sectors of the economy need funding.
It must be known that the workers and many Zambians are still highly taxed and in the past few years we have not seen the PAYE Tax bands adjusted for the employees. We will be highly expectant on rigorous handling of this by the new Minister of Finance. Among these expectations, NAREP expects that not only should tax bands be adjusted upwards, but that the tax rates will be adjusted too. We have always proposed a flat rate that will cover all groups. In this case we would like to see a PAYE flat rate of about 25% for all employees getting above K4,000 and a 0% for all getting below K4,000.
The above measure will result in tax losses but can be compensated by increasing revenue collected from the corporates and mines. Currently, the 2016 budget projected K7.93 billion budget collections from PAYE and K3.24 Billion projection from Company income tax indicating that workers are highly taxed and corporates represent less than half (about 41% ) of what workers contribute in PAYE. This matter need to be revised whilst corporates which are profitable entities should be seen to be contributing accordingly to the economy.
The VAT still remains high which has made the cost of goods and services more expensive. In this southern region of Africa, apart from Tanzania and Malawi which have 18% VAT and 16.5% VAT respectively, Zambia and Congo Democratic Republic have high VAT rates at 16%. Our friends in Angola have a lower VAT rate at 10 % while Botswana is at 12% with South Africa standing at 14%, whilst Zimbabwe and Namibia have their VAT at 15%. We expect the Minister of Finance to work within the margin of 14-15%. The last time this was revised was during the Mwanawasa Presidency and it can still be done
We expect a reduction in expenditure so that we are able to service the high domestic and external debt interests we are currently servicing. Unnecessary expenses such as non-priority travel costs accrued by government officials should be better managed and reduced. Despite a national expectation that the President would reduce the size of Cabinet, we have further been met with the creation of less cardinal new Ministries that come at a huge cost. We expect the government to commit to the completion of existing roads and other infrastructure projects and not to contract new ones. These are long term projects that should not all be completed in 2017 but stretched beyond that so that other sectors like health and education are able to be allocated some funding as well and not only the road sector. For example the expenditure by function for key sectors of the economy like health and education are still low (currently health 8.3% and 17.2% for education). Our expectation is that not less than 12% of the national budget should be allocated to the health sector.
NAREP also expects that the informal sector will start contributing to the treasury pot. The Withholding Tax (WHT) needs to be well managed as this can bring a lot of revenue to the treasury. With the increased property construction and malls countrywide, we expect revenue collection on WHT to increase from the projected K3.2billion in 2016 to over K5 billion in 2017. We also need to revisit the controversial windfall tax by the mines. We expect the Minister to announce serious cost reduction measures that include non-contractual of new debts that will attract more interest rates to be serviced.
In conclusion, once we focus on a cost reduction budget then we will be able to see citizens relieved of the harsh economic conditions they are already going through. If the Minister increases taxes on the already stretched Zambian people like they have done on toll fees that have been increased by over 100%, we will conclude that this government has no heart for its citizens. The increase in toll fees will impact negatively on the transport sector that is already paying high road taxes and fuel. We will see transport costs go up even further. The solution is to widen the tax brackets so that many people, even those in the informal sector can contribute to the development of this country and not overburden those already in the brackets.
Frank Sichone
NERAP Acting Party Spokesperson
Some of these proposals should be analysed by those proposing before putting them forward. If a flat rate PAYE of 25% is introduced on those getting above 4000 it means after tax a person who gets 4500 will get less compared to someone who is 3900 since he is zero rated. This fella will go home with 3375. But is it fair? Mr Narep please propose workable things not this trash you are proposing.
NAREP I thought you were assimilated to PF? How may MPs does NAREP have this time around?
@Mica that is not how tax is calculated, the person getting 4500 will take home 4375 the excess of 500 is the one subjected to the 25%… so learn to get your facts right as well before posting..
Was also wondering if taxation has changed under PF. Please MICA avoid commeting on issues you dont understand. Are u one of them pf boys? ,thats what they are good at.
Yes widen the tax collection base. One group of interprenuers to be included on the tax net are the so called shylocks, commonly known as KALOBA lenders. These people give monthly loans to Civil servants and other workers at an exobitant high interest rate of between 50 to 65%. That means if you borrow 200 kwacha for example within 30 days you pay back 320 kwacha. if you fail to pay it is assumed that this money has been borrowed again. Then you will be required to pay back 512 kwacha. The colateral or form of security is that one surrenders his ATM to the lender. These people lend to many workers and reap huge profits at the end of the day. The Governemnt should legalize this business and issue licences to these shylocks so that in turn they pay taxes to the goverment.
i totally support you on the issue of legalizing the kaloba business men and women. they pay no form of tax for operating those business.
Mutati might mean well and try to put back the economy on track but unfortunately he has to dance to the tunes of this regime of reverses, always in reverse gear.Shame
Comment:ssshould agriculture be neglected them we will dununa reverse because we need more employees in this sector otherwise no need of saying we r going to diversify economy minus action and man power.
Its better to tax corporations less and increase payee because they will hire more people to work. We collect more taxes on payee than we do in corporate its better off to allow corporations to employee more Zambians and we collect taxes on payee. 25% Incomes should be taxed according to number. those making 4000 should not be taxed the same as those making 3 million for the same period. High incomes should carry a larger tax burden because chances are that income consumes more public services than incomes below.