As the 2024 National budget looms, with presentation slated for this month, the Centre for Trade Policy and Development (CTPD) anticipates substantial allocation to critical economic sectors that will boost the country’s economy.
Speaking for CTPD, Researcher for Public Finance, Matrina Mumba, urged the Zambia Revenue Authority (ZRA) to bolster its tax administration and enforcement capabilities in order to strengthen revenue streams and enhance the performance of the country’s tax revenue collection.
‘’Despite this foresight, the first half of 2023 has been characterized by unmet tax revenue targets. According to ZRA, in the first half of the year, tax revenues declined by 6.3 percent of the target compared to the same period in 2022.
“Differences were observed across the four taxes. Company tax declined by 29.1 percent, Mineral royalty declined by 23.2 percent, customs duty by 13.0 percent and domestic value added tax (VAT) declined by 6.8 percent,’’ Mumba said.
She stressed that as Zambia strived to make its public debt sustainable, it becomes imperative to scrutinize the performance of its taxation as a pivotal instrument for domestic resource mobilization.
The statement issued by CTPD in Lusaka on Monday noted that this approach was crucial to curb the accumulation of further debt in the pursuit of financing the national budget.
It also expressed concern that the continued closure of major mines leading to low output had significantly reduced the mining sector’s contribution to revenues hence the need for this to be resolved promptly to avoid further revenue losses.
“The net collection of taxes during this period registered a 7.7 percent decline, primarily attributed to a reduction in direct taxes. This downturn is chiefly attributed to reduced output in the mining sector, among other factors, which has adversely impacted the collection of key taxes, such as company taxes,’’ the centre added.
The statement noted that there was need for ZRA to expand its revenue collection to the informal sector as this would enhance resource mobilization for the country.
“Within the same timeframe, VAT on imports, pay-as-you-earn (PAYE), and withholding taxes emerged as the top three contributors to total revenue, accounting for 21.1 percent, 20.1 percent and 10.1 percent, respectively.
“While this signifies an increase from the previous year, it also underscores an overreliance on formal sector taxation,’’ CTPD said.
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