‘Taxes in Zambia are too many’

DR Michael Kaingu says what is killing African countries is the belief that governments must make money from a lot of taxes thereby killing the industries.

“It’s not necessary that government must make money from taxes but it can make money from contributions, and that’s the reason why we have unemployment. If Kozo Lodge is subjected to pay so many taxes, where do I get the money for salaries? If Choma Maanu Radio Station is heavily taxed, then how do we pay good salaries to our workers? So, it’s not that nonsense of minimum wage,” said Dr Kaingu. “I hope the President [Hakainde Hichilema] will look at this as a businessman because he knows very well that each industry has ways of paying its workers well. Each sector has a way of maintaining its workers. The taxes in Zambia are too many to an extent that now we are taxing people for sinking boreholes. So, you cannot look for money that way.”

Michael is right.

There’s nothing wrong with giving Caesar what is due to him. As it is said, the most important objective of taxation is to raise required revenues to meet expenditures. Apart from raising revenue, taxes are considered as instruments of control and regulation with the aim of influencing the pattern of consumption, production and distribution. Taxes thus affect an economy in various ways and some effects may not necessarily be good.

Thus, we are told that do not collect any more than you are required to. In Romans 13:6-7 we are told, “Let everyone be subject to the governing authorities, for there is no authority except that which God has established. The authorities that exist have been established by God. Consequently, whoever rebels against the authority is rebelling against what God has instituted, and those who do so will bring judgment on themselves. For rulers hold no terror for those who do right, but for those who do wrong. Do you want to be free from fear of the one in authority? Then do what is right and you will be commended. For the one in authority is God’s servant for your good. But if you do wrong, be afraid, for rulers do not bear the sword for no reason. They are God’s servants, agents of wrath to bring punishment on the wrongdoer. Therefore, it is necessary to submit to the authorities, not only because of possible punishment but also as a matter of conscience. This is also why you pay taxes, for the authorities are God’s servants, who give their full time to governing. Give to everyone what you owe them: If you owe taxes, pay taxes; if revenue, then revenue; if respect, then respect; if honour, then honour.”

Taxes are necessary but they should never choke anyone, any business. It is taxes that have slowed entrepreneurship in our country. It is taxes that have stifled any measures aimed at job creation. Job creation will remain a pipedream for as long as enterprises remain cash cows for the government.

Successive governments since the dawn of multiparty politics in Zambia have relied on high taxes to oil the government machinery and otherwise, much to the detriment of the few taxpayers. In fact, the essence of tax has not been realised. There’s little service delivery despite overtaxing citizens. Look at the state of roads, public services! Look at budgetary allocations to education, health, water and sanitation, and other essential sectors! Can one justify our high taxes? No doubt the government should have a serious review of our taxes. We need to inject some oxygen into businesses if we desire to grow them and in return start reaping the benefits. You cannot milk the cow to death.

As economics discussion notes, “If taxes produce favourable effects on the ability and the desire to work, save and invest, there will be a favourable effect on the employment situation of a country. Further, if resources collected via taxes are utilised for development projects, it will increase employment in the economy. If taxes affect the volume of savings and investment badly then recession and unemployment problem will be aggravated. Again, effects of taxes on the price level may be favourable and unfavourable. Sometimes, taxes are imposed to curb inflation. Again, as an imposition of commodity, taxes lead to rising costs of production, taxes aggravate the problem of inflation. Thus, taxation creates both favourable and unfavourable effects on various parameters. Unfavourable effects of taxes can be wiped out by the judicious use of progressive taxation.”

It’s a pity that even the PF which, under Michael Sata promised lower taxes, ended up chocking people with so many unjustified taxes. Like Michael said, it was the PF government which introduced taxes on boreholes, yet the government failed to deliver water in people’s homes. And when people take the initiative of digging boreholes, you tax them for that. What nonsense is this!

You can’t run a country solely dependent on chocking citizens with taxes. How can a government expect to promote local industries under such a high tax regime? To the contrary, foreign investors are given tax holidays of up to five years. And these are the same characters who, when such a holiday expires, go back to their countries, rebrand and come back as a different entity. And they are given another tax holiday of a similar period.

We hope that the New Dawn administration will consider this concern and help develop the local industry. Otherwise, there will be no meaningful entrepreneurship when local industries are chocked by a barrage of taxes.

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