Govt urged to broaden tax base

A research report has emphasized the need for Zambia to improve revenue mobilization if it is to mitigate the liquidity bullet structure of the two Eurobonds the country has issued.

The report dubbed ‘A Cautionary tale of Zambia’s International Sovereign Bond Issuances’ conducted by the Zambia Institute for Policy Analysis and Research (ZIPAR) is advising the Zambian government to prioritize broadening the tax base.

The report has suggested streaming of incentives, reducing exemptions and enhancing Small and Medium Enterprises (SMEs) and the formal sector taxation as some of the measures government should employ.

It has also proposed strengthening tax administration through modernization and continuous enhancement of the technical capacity of the Zambia Revenue Authority (ZRA), tax-payer education, curbing of tax evasion and redesigning of the mining fiscal regime as the other measures.

Speaking during the official launch of the report, ZIPAR Research Fellow in charge of Public Finance Shebo Nalishebo noted that these are the measures his institute foresees will improve efficiency in tax administration and thereby increase compliance by tax payers.

Mr. Nalishebo says besides rationalizing expenditure and setting up a sinking fund, the Zambian government can further consider refinancing the US$1 billion Eurobond issued in 2014.

And Ministry of Finance Permanent Secretary for Budget and Economic Affairs Pamela Kabamba who officiated at the launch has observed that the report by ZIPAR has highlighted pertinent recommendations which government appreciates and will critically consider.

Ms. Kabamba says government is willing to work with various stakeholders and with think tanks like ZIPAR in its quest to ensure that risks that may arise from the issuance of the US$750 million and the US$1 billion Eurobonds in 2012 and 2014 respectively are minimized and ensure that the credibility and integrity of Zambia is upheld.

Earlier, ZIPAR Executive Director Pamela Nakamba-Kabaso said the report has made clear that Zambia has only limited experience of borrowing from international markets and as such the country can learn valuable reasons from other countries that have walked the path.

Dr. Nakamba-Kabaso has cited the illuminating cases of Argentina and Greece which both experienced major sovereign debt defaults as the countries Zambia can learn from.