By Scoop Reporter
THE Jesuit Centre for Theological Reflections (JCTR) has proposed for an increase in non-taxable income threshold to K5,200 and add a higher band at 40 percent in the 2021 Budget.
JCTR has also proposed for low informal sector tax revenue contribution to the national treasury as a measure to widen the tax base so as to increase revenue for government.
It in proposals for the 2021 National Budget submitted to the Ministry of Finance’s Budget Office, JCTR says the cost of living has drastically increased over time with the cost of essential goods rising and reducing the ability of citizens to access them.
It says this scenario has been exacerbated by the COVID-19 pandemic while salaries and income levels have not risen to correspond with the high cost of living being faced by citizens.
It says its Basic Needs Basket (BNB) for June 2020 for Lusaka, stands at K7060.80 and on average K5,200 for a family of five, meaning even with the income tax-free threshold currently standing at ZMW 3,300, this is not feasible.
It notes that Pay As You Earn (PAYE) is the single largest revenue source within direct taxation and that the current arrangements leave high income individuals untapped as a potential income source through PAYE above K6, 200.
“Thus, while bands are progressive, more can be done to improve the progressive nature of the income tax system if stretched and raised. Overall revenue impact is expected to be neutral. Raising the non-taxable income threshold to K5, 200 will better access to basic needs by most citizens whose incomes have been eroded by ever increasing cost of living,” reads the submission in part.
And JCTR has proposed for low informal sector tax revenue contribution to the national treasury as a measure to widen the tax base so as to increase revenue for government.
“Enforce informal sector tax regime. This may help government increase its allocation of funds to essential sectors including social sectors and economic like health, education and social protection. This will lead to increased domestic tax revenue to be mobilised by Government.
“The measure would reduce on government much dependence on borrowing (debt) and lead to increased levels of tax compliance by the informal sector,” reads the submission.