No tax for lowly paid Zambian workers – October/November 2010

Effective April 1, 2011, Zambian workers earning less than K1, 000, 000 million will no longer pay income tax. This is according to the recent 2011 budget presentation made by Finance minister Situmbeko Musokotwane.

“We have returned money to the pockets of our workers to enable them to better provide for their families,” he said.

Dr Musokotwane says the Pay As You Earn (PAYE) exempt threshold which was increased from K600, 000 to K700, 000 per month in 2009 and currently stands at K800, 000 per month is a sign of government’s firm commitment to provide relief to workers, especially those in lower income brackets.

In addition, government has increased the exempt portion of income paid at termination of employment from K25 million to K35 million and also increased the tax credit for differently-abled persons from K1.92 million to K3.0 million per annum.

Not enough to Reduce Suffering

However, despite government’s attempt, stakeholders say the threshold will not reduce the suffering of Zambian workers.

“While the initiative is meant to increase purchasing power especially for those in the low income-bracket, the high cost of essential non-food items inhibits households from experiencing much relief. The government needs to deal with the wider challenge of the employment sector, which is marred by very low wages as well as low levels of formal employment,” said Miniva Chibuye, coordinator of the socio-conditions programme at the Jesuit Centre for Theological Reflection (JCTR).

Basic Needs Basket

According to the JCTR’s Basic Needs Basket (BNB), a tool for measuring the cost of living for an average family of six in various towns across Zambia, the cost of food alone in September, 2010 was K867, 850 in the capital Lusaka.

Adding the cost of essential non-food items such as housing, electricity and water, the total cost of living for September was K2, 850, 680.

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Find out more about Minimum Wages in Zambia.