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TAX REFORM LONG-OVERDUE, ENCOURAGED BY GOVERNMENT PLANS FOR URGENT REDRESS, OBSERVES THE JCTR October 2006 The JCTR says that “a transparent, broad-based and well administered tax regime,” as suggested by the Republican President during the official opening of the first session of the 10th National Assembly, not only means relief for the few Zambians that are bearing the huge tax burden, promotion of the stake of citizens in national governance, but also more importantly must mean that people see more direct benefits of paying tax such as increased availability of drugs in hospitals, improved learning school environment for children, etc. Calls for a serious reform to the tax regime in Zambia have been heard many times over the past years and more recently these calls have focused particularly on mineral royalties which are presently significantly low. According to the JCTR, the mineral royalty question in Zambia has in many ways brought to bear the lack of a stronger conscience on “corporate social responsibility” by the business entities involved. As we begin to see more global drive towards ethical social responsibility, the expectation was that the copper mines paying this low percentage in royalties would have been more proactive in promoting its revision. That is what socially responsible behaviour entails and that is how corporate citizenship is encouraged. In addition, there is a greater need to have the growing difference, especially seen in wages, between business and society narrowed in order to create a strong convergence for the realisation of development aspirations in Zambia. As has been already observed, a broadened tax base means that there will be sharing of the tax burden across a broader spectrum of society and not only restricted to those in the formal sector, the easiest sector to reach. Taxation as we know is the avenue for people’s effective participation in the governance of their country. This is because payment of tax implies that citizens will demand for more accountability and transparency in the way their resources are being applied. Within this tax reform process, care must be taken to ensure that those, especially women found in informal sector, whose economic activities merely place them on the margins of survival, are not disadvantaged disproportionately in the quest to broaden the tax base. We know for certain, for example, there are many families in this country that only afford to buy mealie meal and other commodities in smaller quantities in what is known as “Pamela-isation” of access to some basic needs because they simply cannot afford to make savings to purchase in bigger quantities. Their returns from economic activities cannot enable them to even make savings for the next day. The need for reforming taxation in our Zambian context should undoubtedly be based on the realisation that people’s contribution to national development through taxation, at the very minimum, must not compromise their ability to have access to a nutritiously balanced diet three times in a day. This is because it breeds resistance. The inability of the majority of household to have access to a nutritiously balance diet is starkly revealed by the cost of food on one hand and households’ inadequate economic opportunities for raising income on the other. The JCTR Basic Needs Basket that measures cost of living for a family of six in Lusaka and other urban areas (Livingstone, Kabwe, Ndola, Kitwe and Luanshya) recorded the cost of food (mealie meal, beans, eggs, vegetable, Kapenta, etc) in Lusaka at K463,450. When costs for housing, water, energy, transport, etc., are included, the total for basic needs comes to K1,422,950. It is the view of the JCTR that the tax reform process will not only look at the broader needs of Zambia but will seriously bring into focus people’s living conditions, as seen among others, the Basic Needs Basket. While it may be difficult to pay immediately wages according to the prescription of the Basic Needs Basket, it is important to see the Basic Needs Basket as a statement of aspirations designed to express a standard against which the performance of Zambia’s development efforts can be held accountable. |
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