By KENNEDY MUPESENI –
THE Government needs to broaden the tax base by creating more employment in the private sector to avoid overburdening the mines, a local economist has said.
Franklin Membe said there was need to increase to increase personal income tax by creating jobs in various sectors of the economy to reduce over dependence on mining houses for tax revenue to fund projects.
Currently, he observed, the financial system does not encourage creation of enterprises by Zambians in the country.
“The only way is to encourage creation of enterprises by local entrepreneurs so that Government get Pay-As-You-Earn (PAYE) thereby broadening the tax base,” Mr Membe said in an interview.
Under the 2015 national budget the government has redesigned the mining fiscal regime by replacing the two-tier system with simplified mining tax structure which moved mineral royalty for underground mining operations as a final tax to eight from six per cent.
Other changes are the 20 mineral royalty for open cast mining operations as a final tax and another 30 per cent corporate income tax rate on income earned from tolling which has raised concerns by mining houses in the country.
But Mr Membe said that lack of robust financial services was hindering the growth of the Small and Medium Enterprises (SMEs, which could contribute greatly the broadening of the tax base in the country.
“The current financial system does not encourage creation of companies as it is difficult for SMEs to get loans from financial services,” Mr Membe said.
He said the Government was dealing too much with the local commercial banks thereby
creating business for them, hence the banks’ shunning of SMEs.
“The Government should take out money from the commercial banks to the Bank of Zambia (BoZ) to create room for the banks to look for private enterprises and individuals for loans and other services,” he added.
Mr Membe further said it was time Zambians started owning businesses adding that professionals in different fields like mining would own mining firms if the country had user friendly financial sector for SMEs.