The Zambia Institute of Chartered Accountants (ZICA) is calling on the Minister of Finance to consider granting tax relief to workers through reduction in Pay As You Earn (PAYE) tax rates, and widening the tax bands for purposes of taxing income for salaried workers.
ZICA Technical and Standards Manager Bruce Mwewa has observed that Zambia’s salaried employees are presently the highest taxed in the region.
He says statistics also show that Zambian workers have been the highest contributors to the national treasury averaging at about 25% of the total tax revenue in the last three years compared to the 7% contribution by corporate entities in income taxes.
He says a comparison of effective PAYE rates among African countries shows that Zambia ranks highly at 34% for annual income of US$50,000.
In a statement made available to Q-news, Mr. Mwewa says the Institute further established that an individual employee with a monthly salary of US$3,000 would bear a PAYE tax burden of close to $1,000 in Zambia whereas their counterparts in Kenya will pay around $420, close to $340 in Ghana and around $575 in Botswana.
He says these statistics reveal the fact that the current PAYE system creates a disconnect with the economic objective of empowering this category of citizens as their disposable income is adversely affected.
He states that the current PAYE regime also negates the Seventh National Development Plan theme of “Accelerating development efforts towards the Vision 2030 without leaving anyone behind”.
Mr. Mwewa says ZICA notes that the key deliverable of poverty and vulnerability reduction as well as reduced developmental inequalities may not be achieved if workers are continuously subjected to high taxes.
He says ZICA is therefore proposing a tax system that grants relief to this category of tax payers, while at same tome allowing the wealthy to pay a little more.
Mr Mwewa further states that ZICA is also proposing a reduction in the top tier PAYE tax rate from 37.5% to 35%.