Government has proposed to
increase the current tax-free threshold of Pay As You Earn (PAYE) by 10
percent.
Minister of Finance Alexander
Chikwanda explained that the threshold has been raised from the current K 2
million to K2.2 million per month.
Mr. Chikwanda told Parliament
today that the increase in the threshold is in order to maintain the value of
the tax-free threshold of PAYE.
He explained that the 10 percent
adjustment is at a rate higher than the expected inflation target of six
percent for 2013.
He said all tax bands will now be
adjusted upwards by K200, 000.
Mr. Chikwanda added that the
current proposed income bands from K0-2,200,000 million per month will be at
0%, those getting K2,200,000-K3,000,000 per month will be at 25 %,
K3,000,001-K5,900,000 will be 30% per month while those getting above
K5,900,000 per month will be taxed at 35 %.
He said in order to further
enhance the take-home pay of employees, government has proposed to increase by
64.5 %, the tax deduction for pension contribution, to K255, 000 per month.
Mr. Chikwanda said as a result of
these two measures, an additional K257.3 billion will be put in the pockets of
industrious workers.
He stated that as a demonstration
of government’s commitment to restore a culture of savings and investment,
government has proposed to remove tax on interest earned by individuals from
savings and deposits accounts.
He pointed out that government
has also proposed to abolish the medical levy which is currently charged on
interest earned on savings and deposits accounts, treasury bills, government
bonds and other similar financial instruments.
The Minister added that the total
revenue impact of these two measures is a loss of K40.6 billion.
Meanwhile, Mr. Chikwanda has
proposed to zero-rate bread and wheat for Value Added Tax (VAT) purposes.
He explained that this is in
order to reduce the cost of living for families as well as promote domestic
production of wheat and wheat products and enhance competitiveness.
He also disclosed that regarding
measures on customs and excise policy, government will address matters relating
to reducing the cost of doing business, supporting local value addition
initiatives and promoting the manufacturing sector and promoting inclusive
growth and development through employment creation hence fostering growth of
the tourism sector.
Mr. Chikwanda said despite the
stable and rapid growing economy, the cost of doing business in Zambia is still
high, adding that in order to address this and make capital equipment more
affordable, government has proposed to remove duty on a wide range of mechanic
and electrical machines and other machine tools.
ZANIS
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