Taxes are the means by which government mobilizes revenue to finance public expenditure programs for security of citizens, infrastructure developement, public health, education and social welfare. The Government draws the power to impose taxes on citizens from the Constitution. Taxes are defined in the Constitution as, rates, levies, charges, tariffs, fees, tolls and duties. to be able to efficiently rais tax revenue, the tax burden must taxes must be shared fairly amongs the citizens and revenus raised must be redistributed fairly for the common good of all.
It is generally accepted that fairness in taxation is achieved if persons with the same level of income and, presumably in similar circumstances, pay equal amounts of tax, while those with higher income, thus, having greater ability to pay, pay more taxes (the principle of proportionality and ability to pay). Policy makers, thus, seek to consider a person’s comprehensive income in a year to arrive at a fair share of taxes that a citizen must pay. To achieve fairmenss tax systems combine a multiplicity of taxes to ensure that the tax net is cast as widely as possible.
The Zambia Tax system includes income taxes, consumption taxes, property taxes and taxes target at gorips that enjoy certain Government services.
This includes salaries, wages, interest, capital gains, rent, profits, royalties, dividends, gifts, employer contributions to a pension fund, unemployment benefits, royalties and income in any kind. These sources are taxed separately for administrative convenience.
Income taxes include:
- Income Tax -Tax on business profits
- Pay as You Earn (PAYE)– Income Tax on Employment Income
- Skills Development Levy– Tax Imposed on gross emoluments of an employee, paid by the employer
- Withholding Tax– Income Tax that is deducted at source
- Turnover Tax (TOT)– Income Tax on presumed profits, a simplification of income tax for small businesses
- Presumptive Tax– Income Tax on presumed profits of operating of a public passenger transport vehicle
- Base Tax– Income Tax on presumed profits of operating a market stall
- Property Transfer Tax– Income Tax on proceeds realized from the sale of property
- Mineral Royalty– A tax charged for extraction of minerals
Consumption taxes inlude:
- Value Added Tax– a tax on consumption goods and services other than those exempted
- Excise– Tax on selected luxury goods and services, as a source of additional government revenue and goods and services that are associated with externalities in order to either regulate their consumption or internalize their cost to the public.
- Insurance Premium Levy– a tax on all insurance premiums except life assurance premiums
- Tourism Levy– a tax on the consumption of hotel (including conference and event hosting) and lodging facilities
Property taxes include:
- Land Rates
- Property Rates
Other taxes are:
- Road Tax
- Trading Liscence Taxes