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‘Tax revenue must proportionally increase’ CSO demand
‘This bill is long overdue as the government has been allocating funds to its drafting for the past three national budgets. We implore the government that the bill be presented to the public before the 2013 national budget is presented.’|
CSO made the demand as they made a joint submission to the Ministry of Finance on tax and non-tax revenue policy proposals which they hope to see in the 2013 national budget.
By submitting a joint proposal CSO aim at ensuring that there is increased domestic revenue to sustainably finance poverty reduction programmes and national development while at the same time increasing equity in revenue collection.
‘Zambia is facing particular tax performance challenges that need to be addressed urgently. The ratio of tax revenue to gross domestic product (GDP), often used as a basic measure of the performance of a tax system, has been on the decline, from 19.2% in 2000 to 15% in 2009, though with some improvement to about 17% in 2010 (SNDP). Underlying this overall decline is the change in the structure of tax revenue (i.e. the different sources of tax). The performance of trade taxes revenue that previously were major contributors to the tax revenue have declined while consumption taxes have also declined. This has left government to rely on income taxes, particularly Pay As You Earn (PAYE) which has raised concerns of equity,’ CSO state.
CSO argue that sectors of the economy contributing highly to economic growth should contribute the most to tax revenue to ensure citizens benefit from the positive economic growth.
In the last 5 years Zambia has recorded an annual average GDP growth rate of 6.1% which has been spurred on by agriculture, construction and the mining sectors.
These sectors, CSO argues with the inclusion of tourism and the energy are expected to remain positive economic prospects that will bring in an estimated GDP of between 6 and 7%.
‘Their contribution to GDP, their contribution to tax revenue must proportionally increase.’
In addition, CSO want all tax leakages especially those in the mining sector sealed. They proposes empowering the Mining Tax Unit of the Zambia Revenue Authority (ZRA) to ensure efficiency in collecting mining tax revenue especially from variable profit tax and other mining tax types.
CSO call on government to mainstream the precious minerals industry as the current system is failing to maximize revenue which is being lost through under declaration and smuggling.
‘If the industry is appropriately regulated, export earnings from gemstones and subsequent tax revenue generated can be substantial. But to achieve proper regulation will require the enactment of a separate law from the law that governs base metals,’ they state.
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