The Civil Society for Poverty Reduction (CSPR) has welcomed the upward revision of the minimum wage for domestic, general and shop workers.
CSPR Information Management and Communication Programme Officer Diana Ngula said the move to adjust the minimum wage is commendable.
Ms. Ngula said studies by the Central Statistical Office on the living conditions and monitoring survey of 2010 and by the Jesuit Centre for Theological Reflection reveal that an employee should earn at least K1 million to be able to meet the cost of basic food items for a family of six in an urban area.
The minimum wage in Zambia stood at about K250,000 for a long time until yesterday when government adjusted it upwards by about 100 per cent thereby allowing domestic workers to now earn over K500,000 per month while shop and general workers will now earn slightly over K1 million.
She said in a statement to ZANIS today that government should also increase and improve equity within the tax system by reducing the burden on formal employees to allow them to meet the new wage scales for their domestic workers.
“The current Pay As You Earn (PAYE) threshold that exempts formal workers earning K2 million and below from paying PAYE is equally commendable. Our concern nevertheless is the high percentages of the different PAYE tax bands that the majority of formal employees earning above 2 million kwacha incur,” she said.
Ms. Ngula however expressed worry that the upward adjustment of the minimum wage may not be followed by most formal workers due to the fact that their salaries are not proportionate with the prevailing economic indicators.
She added that government should consider changes in the market economy especially that some people in formal employment are very poor and are living miserably.
She noted that despite being in formal employment, some workers’ salaries are not adequate to get essential commodities such as electricity, food, school fees, house rentals, and wages for their domestic workers.
Ms. Ngula has since proposed to government to consider reducing Tax Rates for the Current PAYE Income bands by five per cent for formal employees that are earning over K2 million.
She stressed that such a move would provide equitable relief for formal employees and encourage adequate incomes for accessing basic needs and services.
“We also propose to government to introduce a minimum tax free income threshold for small and medium scale entrepreneurs (SMEs) under turn over tax. The turnover tax law should therefore set a minimum income threshold when turnover tax becomes due on income,” she explained.
The current turnover tax laws demands that every entrepreneur earning K200 million and below per year should pay turnover tax of three per cent.
Ms. Ngula described the current turnover tax laws as very punitive because SMEs do not have a relief under turnover tax as those tax payers under PAYE who have an income tax free threshold currently at K24 million per year.
Meanwhile, the CSPR has called on government to show commitment in taxing other sectors of the economy especially those contributing highly to economic growth such as construction and mining.