The Centre for Trade Policy and Development has urged government to work on fixing the broken existing social schemes before jumping on to the National Health Insurance Scheme.
CTPD Executive Director Isaac Mwaipopo said Zambia has a number of already existing social schemes that have lamentably failed to meet the expectations of citizens due to poor and non-transparent management systems.
Mr Mwaipopo said CTPD expected that the government would first prioritize working on fixing these schemes by adequately addressing the many challenges they face so that they labor towards people’s expectations before moving on to introduce another scheme.
He said currently, the National Pension Scheme Authority serves as one example of a scheme that has not lived to expectations as a number of people subscribed to still struggle to access benefits.
Mr Mwaipopo said there is need for the government to realize that the citizens generally do not have challenges complying and supporting good initiatives but that the biggest problem the citizens have with the current system has been its failure to deliver services to the expectations of the people and the failure to promote and defend public interest, especially in the utilization of public resources.
“The recent auditor general’s report brought out shocking revelations on abuse of public funds and the expectations from the citizens was that Government was going to act in the best interest of the public, but to the shock of everyone, the report has been taken like a mere academic thesis drafted for merely passing annual exams. It is this attitude that has led to many citizens having less confidence in Governments ability to deliver on its promise to the people,” he said.
“While we understand that most people find it expensive to take care of their health bills using “Out- of the Pocket” money due to the high poverty levels, we think it’s more prudent to guard against systems and individuals that embezzled resources that are meant to advance the common good of society. As government works tirelessly to introduce the proposed health insurance scheme, it is also important to note that citizens are already paying various forms of taxes to which they can hardly see proper use or benefits, examples include the National Pension Scheme where workers contribute on a monthly basis, 5 percent of their earned income,” Mr Mwaipopo said.
“The other example is around the fees collected through toll gates, many motorists have continued to wonder where funds meant for the maintenance and construction of roads goes. Can government explain to the public where the money collected from toll gates is going and who is benefiting from this money? Wasn’t it meant for the maintenance of roads? If that’s the case why can’t people see their money being put to good use?”
He added, “The Zambia Revenue Authority has continued to complain about low levels of compliance on Tax Payments. However, one of the leading contributing demotivating factors to paying tax in Zambia has been failure by subsequent governments to put to good use money collected through various taxes.”
“We know that one easy target advantage of a tax- based system is that it is easier to mobilize funds from everyone, especially people in the formal sector. But we should not lose sight on how the tax burden has increased rapidly over the past few years in this country. A worker earning just above K3, 300 will have 25% of his or her monthly income deducted and remitted to the Zambia Revenue Authority (ZRA) as tax obligation- this is besides the need to pay other forms of taxes such as TV Levy paid at K5 every month and electricity tariffs which have gone up by over 50% since 2017, withholding taxes on rent at 10% and Value added tax in general at 16%.”
He noted, “In addition, as noted, workers are required to pay 5% of their salaries as a pension contribution with no guarantee that they would even access this fund in their life time. There are a number of economic consequences for straining people’s incomes. Firstly, when the tax burden is high, it has a negative effect on economic growth as this reduces people’s savings and in turn negatively affects investment.”
“Another problem with high taxes is they reduce people’s choices in that the lower incomes strain family’s consumptions. Even worse is that the surge in taxes on some of the basic requirements like electricity can lead to an increase in other expenses as electricity costs are factored in when pricing other commodities leading to reduced people’s standard of living.”
Mr. Mwaipopo said CTPD is of the view that, instead of just introducing tax after tax, government must first focus on countering the challenges people are currently facing due to reduced incomes and higher prices they have to pay for services.
“Taxes are necessary for economic functioning but equity must be observed just as equity in the financing of a health system must be observed. Government must realize that just as important as the amount of taxes collected is, the way these revenues are allocated to different economic sectors is even more important,” he said.