Government incurs huge losses through taxes

Mukwanda Danny operates a Zamcab business at the Soweto Market in Lusaka. With this business he feeds a family of five. Mukwanda is among thousands of people joining the lucrative informal sector.

The informal sector is absorbing thousands of entrepreneurs. About 70 percent of the working people are operating different- not registered- businesses in Lusaka. Mukwanda Danny operates a Zamcab or wheelbarrow where he ferries goods for vendors to and from the market at a fee. “I get about 500 and 600 thousand kwacha (more than 100 USD) in a month. I pay my rent and I pay school fees for my children”, says Mukwanda. That is equivalent to the average Zambian income. Yet, Mukwanda hesitates to pay taxes. He feels that the government has not assisted him: “The majority of us do not benefit in any way from the government’

The informal sector within Lusaka falls under the City Council. But in 2009 the Council collected only 14,000 billion kwacha (about 64,400 billion USD). That is way below the target of 80 billion kwacha (368,000 billion USD). The Council Public Information Officer Chanda Makanta says the best they have collected was in 2005 with a collection of 16,000 billion kwacha (73,600 billion USD).
The council is unable to collect taxes effectively. “The council is understaffed and more so, there is no regulation in place demanding the inclusion of the informal sector”, says Chanda Makanta. She is calling for reforms in the sector.

Tax reforms

Love Mtesa, an economist expert, agrees that Zambia urgently needs some reforms: ‘’This should have been done yesterday, ” Mtesa says the economy will be improved with a better taxation policy. He says in 1962 every person above 18 years was paying taxes and by then the kwacha was strong against the dollar. “But now the exchange rate is unbelievably high and the government looses billions of money in uncollected taxes”, says Mtesa. This money could help improve the infrastructure in the country. Experts say, with reforms and proper policy to regulate the sector, every of the nine constituencies within Lusaka would end up having an additional school every year, and maybe two health facilities would come up in a year as a way of plowing back to the community.

Jane Kariuki