By BUUMBA CHIMBULU
THE Zambia Revenue Authority (ZRA) has been commended for digitising its tax collection systems by experts as technology would augment the authority’s capacity to combat crime. Technology offers progressive and practical solutions to persistent problems affecting various sectors of the economy, according to tax expert, Oliver Saasa.
Professor Saasa has however urged the ZRA to undertake extensive consultation due diligence before implementing the proposed Digital Tax Stamps (DTS). He insisted further consultation was needed to ensure systems like the DTS worked as intended.
Digital Tax Stamps are paper stamps attached to goods or their packaging to facilitate tracking. The solution is part of Government’s strategy to combat illicit trade, plug revenue leakages and close existing gaps in the tax collection system.
“The fact that there still exists several points of contention regarding the project suggests inadequate consultation on the authority’s part. “The system must be introduced as a win-win solution between the tax authority and manufacturers in terms of accountability vis-à-vis business viability in a stinging economy ravaged by Covid-19. And to achieve this, all stakeholders must be given a voice,” Prof Saasa said.
Prof Saasa warned that when not implemented correctly, the tax measure had the potential to raise operational costs for legitimate manufacturers in the excisable sector, thus putting inflationary pressure on certain products. He further said that while DTS was effective in sectors rife with smuggling, counterfeiting, tax leakages, and production under-declaration, a blanket implementation would be detrimental to compliant manufacturers.
“A poorly designed solution would likely result in increased operational costs for compliant manufacturers in excisable sectors like the clear beer industry. These additional costs will eventually be passed onto consumers who may react by buying less of the affected goods. “Zambia’s clear beer sector is dominated by only a handful of players thus making tax compliance tracking easy. If anything, improving enforcement control is a cheaper alternative to DTS,” Prof Saasa said.
Prof Saasa had since urged the ZRA to focus on the problem and not the technology and called for further engagement with affected private sector players. He stated that the stamp’s intended benefits notwithstanding, ZRA needed to urgently address some of the more pressing concerns raised by stakeholders before rollout commences.
