By Christopher Chisi
Findings on the analysis of the sales tax bill by the Zambia Tax Platform have revealed that, once the Sales Tax comes into effect in July this year, the inflation rate is likely to increase above the Bank of Zambia projections due to its cascading effect.
According to the Z-T-P, which is a consortium of Civil Society Organization comprising, the Jesuit Centre for Theological Reflection, Action aid Zambia, Zambia Council for Social Development, Centre for Trade Policy and Development among other organizations, the inflation rate will increase because Sales Tax will be collected at every stage in the supply chain.
Speaking during the launch of the findings, in Lusaka CTPD Researcher, Bright Chizonde notes that given the current economic situation, the introduction of the new tax regime will further lead to the reduced competitiveness of Zambian goods and Services on the market, reduced tax revenue collection and limited growth of the Manufacturing Sector.
He has since recommended that the Tax rate imposed on goods and services be reduced from 9 percent to 5 percent in order to reduce the inflationary effect of Sales Tax.
The CTPD Researcher advised the government to consider implementing Sales Tax after the end of the current planning period for the Medium Term Expenditure Framework in order to deal with existing limitations of the Sales Tax Bill and to gather sufficient stakeholder support.
“Sales Tax will be imposed on the importation, manufacturing, distribution, and retail sale of goods and on the point of sale of services,” he said.
He also called on the Ministry of Finance and Zambia Revenue Authority (ZRA) to coordinate with the Ministry of Commerce, Trade and Industry in order to avoid violating International Trade Treaties on non-discrimination once the Sales Tax is implemented in July this year.
Speaking at the same event, Action Aid Zambia Country Director, Nalucha Ziba said there is need for the country to reflect on how the country is among the many countries struggling to realize meaningful domestic resources from various sectors of the economy.