Translating PF Manifesto into Economic Policy

I took my time to read the PF Manifesto and see how it can be translated into Economic policy.

One think is for sure, it has good things embedded in it, but the whole 'workability' of it, needs understanding the variables concerned. A simple example: There is increased Government expenditure accompanying a reduction in taxation. To all of us, this may look an impossibility and totally not possible. You can not increase your spending while keeping your revenues constant or even reducing revenue. Impossible? Well, not when you read through and realize the logic behind the increase compared to the current levels.

Tax compliance has been Government's worst enemy. How many of us have been offered a deal in the shops in town "Do you want a receipt? or no receipt for this purchase?". You say no receipt and you pay less the tax! But that's like shooting yourself in the foot. The less you pay tax, the less money government will have and the less services and structures you will see around town. We as Zambians need to develop a culture of saying no receipt and walk out of the shop and call ZRA to come and arrest that shop owner. You will pay less yes, but you might just be paying with your life as the same tax would have been used to buy medicines and repair hospitals you will need. How can we expect government to finance its operations when we spend all our time dodging paying taxes?

So if compliance levels in tax payments are increased, more revenues will reach the treasury and more can be done. With the levels of compliance right now, we need to find ways that people will start paying taxes and receive more. But I should mention that, past trends of paying taxes and government officials wasting tax payer's money has led to this behavior. We need to find ways that we can make people understand that taxes are what makes the economy and government move.

We can only expect a reduction in Pay As You Earn (PAYE), if Value Added Tax (VAT) performs well and government can finance its operations. The failure of the other taxes, the more you pay through PAYE. So imagine you getting your "no receipt" deal in Kamwala shopping area, but having to pay more in PAYE. Who has been fooled? The government will have to find a way to finance its operations or reduce the services it provides for you.

Simple consumption taxes like VAT seem useless to be paid, but they mean a lot in terms of your PAYE going up or down. So the less taxes you pay, will actually mean the more taxes you will pay! Funny but that's how the system will work!

So with this perspective of increasing compliance on the pay of us tax payers, and just the fact that the Manifesto has only seen a problem in terms of numbers on revenue and expenditure, can the Manifesto be translated into Economic policy and Economic vehicle for Zambia?

We also need to look at the impact of reducing cabinet as a means of reducing expenditure on the part of government. If the expenditure has been reduced through merging of Ministries, we just need the numbers to how much has been saved from such a move. For sure there is logic in merging Education with Science and Technology, but will this, apart from one or two posts of permamnent secretary and Minister and his deputy, result in major reduction in expenditure? If it will, then we have half solved the problem (bearing in mind of the numbers!). There is less expenditure which is wasted and can now be pushed into 15 bags of fertilizer and not 5! Such perspective surely will need serious compliance levels for tax payers. There has to be a way that we can make people pay what they should - the way the Chinese companies increased workers' salaries by simply following the law of the land.

Can such reaction be expected from traders? Or do we need to send ZRA the way it operated the time VAT was introduced? If so, we need to start now as mind you, 90 days have dropped to a lesser figure already!