FINANCE minister Margaret Mwanakatwe says the government knows exactly what it would gain in terms of money once the Sales Tax is implemented this year. And the Eastern Province Chamber of Commerce and Industry says the consultations on the Sales Tax should have been done before announcement of the Sales Tax measures. During a Sales Tax Engagement Forum at Chipata’s Protea Hotel on Tuesday, Mwanakatwe said once implemented, the Sales Tax would have a lot of benefits to Zambia.
“We know exactly what we would get in terms of money and it’s a significant uplift and I mean significant uplift if we go Sales Tax this year,” she said.
Mwanakatwe said what the government was proposing was a hybrid of the best value addition and that of Sales Tax.
“I know that Malaysia, 15 May last year, switched to Sales Tax. We are saying let’s protect the value addition that has happened, let’s bring in a list of exemptions but let’s again go further and put through consumptive tax – Sales Tax that has got very few technicalities,” she said.
Mwanakatwe said she does not like keeping people’s money in Value Added Tax refunds.
“The more we collect in this Sales Tax, the more it is going to unease the decision to actually lower taxes. I don’t like keeping your money in VAT refunds, I keep it, it’s not my money, it’s your money but because of the pressure of refunds I end up keeping it. Sales Tax, give to Caesar what belongs to Caesar, you will give me what is mine and I will not take what is yours. It will remain in your business for you to work with, simpler, better and faster,” she said.
Mwanakatwe said Sales Tax was less complicated and more money in terms of revenue. She said at some stage in the development of the economy when value addition would be happening, the government would get to a fully-fledged VAT which was not there now. Mwanakatwe also said all what the mines extract goes out of the country and there was no value addition.
Zambia Revenue Authority commissioner for domestic taxes Moses Shuko gave a detailed presentation on what ZRA has put in place to incorporate the Sales Tax. Shuko said in terms of the systems they were on course to embrace the Sales Tax, adding that most of their staff have been oriented on the Sales Tax.
Earlier, EPCCI committee member Canisius Banda said the consultation process should have been done first.
“We feel we could have the consultation process before the announcement of the Sales Tax measures. It is evident that most people were taken aback when the pronouncements were made during the 2019 budget presentation. We are happy that you responded to those outcries and you have given audience to the citizenry by according them an opportunity to share their thoughts with you,” Banda said.
He said the current provisions of VAT registration had a lot of reliefs to business entities than the Sales Tax, which takes them away.
“We have learnt today that the proposed figures are nine per cent for domestic tax and 16 per cent for imports. On the domestic sales tax, we believe that the introduction of this Sales Tax is going to expose a lot of businesses because the nine per cent will automatically translate into impact on their bottom line and this means that the cost of doing business is going to go up by about nine per cent and that goes direct into the profits of business houses,” said Banda.