By BUUMBA CHIMBULU
ZAMBIA’S current tax system requires overhauling to increase revenue generation as it is outdated and simplistic.
This should be backed by new innovations to enhance non-tax revenue, according to the Zambia Institute for Policy Analysis and Research (ZIPAR) Executive Director, Herrick Mpuku.
Dr Mpuku suggested that Government should overhaul the tax system to minimise its impact on the low-income earners and harness the income potential of the high-income earners.
“Government should raise the minimum tax-free threshold and provide for a greater number of tax bands, which rise, with the top rate of tax being attained at high-income levels,” he said in a statement.
Dr Mpuku stated that the proposed restructuring of the tax system would improve tax compliance from the current 60 percent to higher tax revenues.
Additionally, he explained, such measures should be coupled with a careful analysis of the magnitude and operations of the informal sector with a view to capturing a significant section of unrecorded taxable earnings.
Dr Mpuku’s suggestion comes after he expressed concerned that inspite of reforms in taxation, Government revenue as a proportion of Gross Domestic Product (GDP) had only increased to only 20 percent of GDP in 2020 from 18.4 percent in 2007.
According to ZIPAR, expenditure had grown as a proportion of GDP from 23.4 percent to 37.1 percent over the same period.
Meanwhile, Dr Mpuku welcomed Government’s commitments to reducing the fiscal deficit by containing spending and increasing revenue.
