Changing Culture of Paying Taxes

TODAY, I want to agree with sentiments of economist Chibamba Kanyama, who is also the current director general of Zambia National Broadcasting Corporation (ZNBC), who alluded to the fact that the culture of paying taxes in Zambia is very low more especially among the Small and Medium Enterprises (SMEs).

Speaking when he made a presentation at a workshop in Lusaka recently, he pointed out that it is not easy for entrepreneurs to adopt the culture of being tax compliant when they grow their businesses to higher levels, because initially when their businesses were in the infancy stages they were not cultured to do so.

He went on to analyse economically that, instead of these entrepreneurs paying taxes accordingly they resort to under-hand methods of paying taxes simply because the responsibility of doing so is not there.

Culture in the simple terms of explanation can be equated to a practice norm to which people become accustomed.

In countries like the United States, paying of taxes among those who earn income whether it be an individual or the registered business is mandatory and the culture of doing so is inculcated in the mind of any tax payer.

The income tax law in this country among others, states that every income earned from what ever source is subject to tax.

This sweeping legal statement compels any registered business in Zambia to pay tax.

The Zambia Revenue Authority(ZRA) has gone further to ensure that it becomes user friendly to SMEs by prescribing various forms of taxes that are very suitable to this sector such as Turn Over Tax (TOT)

But today I want to concur with Mr Kanyama with his observation.

The culture of entrepreneurs of becoming resistance to paying taxes even when their business entities have broken into medium range of enterprises is rife.

And worse still if they are pressured to do so by the law they resort to underhand methods.

I have witnessed businesses which have collected value added tax (VAT) for the Government but have found it difficult to remit the money at the due time and have ended owing the Government the same money over a period of time.

The Government is not an industrial sector which can create its own wealth by earning its own income to enforce its projects its expectation is to collect money from various sectors of the economy hence putting a law which compels any income earned to be subject to tax.

In my interaction with SMEs I have discovered that willingness to pay taxes among them is not there and those who pay, do so because they fear to be caught by the arm of the law.

Others have a notion that their businesses are too small to pay taxes and further go on to think that bigger businesses other than theirs are in a better position to do that.

I agree with Mr Kanyama when he pointed out that early sensisation programmes are required to nurture small business into becoming tax compliance in this country.

Statutory obligations among the SMEs are enforced by the law of the land and therefore, it is important that a business which is registered and operated follows them accordingly.

For example most small businesses do not know that they are required to register with Workers Compensation Fund Control Board (WCFCB) to insure workers against any accidents and any contraction of diseases while on duty.

And according to the Act that governs the operation of this organisation, the business which employs workers is supposed to make contribution of money to the fund every year based on the group earnings of workers assed in a year.

I remember in 2012 when I conducted a survey at city market among the traders here in Lusaka to gauge what they knew about ZRA and if they were willing to know about the responsibilities of becoming tax payers, the majority showed willingness to learn and further went on to say that when ZRA was mentioned to them it appears like a monster.

The survey was to facilitate a workshop on tax sensitisation.

It must be appreciated that the private sector has come up to offer employment to the people in the country in recent times and when you look at the law that governs National Pensions Scheme Authority (NAPSA) it is expected that, every employee who earns not less than K15 per month to contributes five per cent of the salary to the scheme and equally the employer should also top up the five per cent to make a total contribution of 10 per cent for the employee.

But there are some SMEs who go on to deduct NAPSA contributions from workers but unable to remit the contributions to the authority and find this situation as a way of just reducing the wage bill.

Source : The Times of Zambia

Leave a Reply