ActionAid laments rising inequalities, calls for diversification of tax base

ActionAid Zambia (AAZ) has expressed concern over increased inequality caused by the austerity measures being implemented by government.

Organisation Interim Country Director, Jovina Newanzake, said Zambia was currently in a state of fiscal austerity that entailed the government cutting down on spending.

In a statement issued in Lusaka, Newanzake noted that this was happening alongside increased tax revenue collection to reduce fiscal deficit.

She acknowledged that tax systems had the potential to address inequalities and correct market failures for sustainable and equitable development.

“While the Pay-As -You Earn (PAYE) tax system is progressive, however, there are concerns by some sections of society about the burden placed on a few employees working in the formal sector,” Newanzake stated.

She noted that some stakeholders had argued that the PAYE should be abolished and other taxes considered instead.

Newanzake said it was Action Aid Zambia’s view that the income threshold of K9,200 subjected to 37 percent is too much.

“ActionAid has observed a growing dependency on PAYE which has a comparatively higher tax rate of 37 percent which is easier for ZRA to collect but is a burden on the taxpayers,” she stated.

Newanzake emphasized the need to diversify the tax base and ensure that other high-income earners were captured in the tax net.

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