Yes, Taxes Might Be Painful but Are Necessary. Eventually, They Fall – By Prof. Lubinda Haabazoka
Breaking News Zambia
NewsNobody enjoys paying more tax. For workers, taxes reduce disposable income. For businesses, they can squeeze margins and affect investment decisions. However, Zambia cannot build a prosperous economy without financing the services and infrastructure on which prosperity depends. The proposed K284.8 billion 2027 Budget illustrates this responsibility. Government expects K233.7 billion in domestic revenue, comprising
Audio article Listen to this story Share Send this storyNobody enjoys paying more tax. For workers, taxes reduce disposable income. For businesses, they can squeeze margins and affect investment decisions. However, Zambia cannot build a prosperous economy without financing the services and infrastructure on which prosperity depends.
The proposed K284.8 billion 2027 Budget illustrates this responsibility. Government expects K233.7 billion in domestic revenue, comprising K178.1 billion in taxes and K55.6 billion in non-tax revenue. Domestic revenue would finance 82.1% of expenditure, compared with 58.7% in 2021 and 76% in 2024, according to the Budget Speech.
That is a significant movement towards financing our own development.
Zambia is our common house. Developing it is much like developing our own home. We cannot demand a stronger roof, reliable water, better sanitation and more rooms while refusing to contribute towards construction.
Our national home needs schools, hospitals, roads, electricity and productive industries. The proposed budget allocates K38.2 billion to education, K30.3 billion to health, and K10.4 billion to Social Cash Transfers, supporting more than 1.6 million households. These commitments require dependable financing.
I am also a tax payer, we are in the same boat. I feel the pain but very encouraged when I see new roads, infrastructure such that there is no need for me to go to another country be be an economic refugee!
Government still proposes K41.9 billion in borrowing and K9.2 billion in grants. Rejecting necessary revenue measures without identifying credible alternatives would mean additional borrowing, unpaid obligations or fewer services.
Borrowing postpones payment; it does not eliminate it.
President Hakainde Hichilema deserves support for placing fiscal discipline and domestic resource mobilisation at the centre of government policy. The proposed 3% of GDP fiscal deficit target and 2.9% limit on net domestic borrowing provide measurable commitments against which performance can be assessed.
My confidence that our money is safe under President HH rests on his proven commitment to fiscal discipline. That confidence must continually be reinforced through transparent procurement, effective audits and visible results. Protecting public money is as important as collecting it.
The proposed tax changes must also be explained accurately. VAT would increase from 16% to 16.5%. The proposed 39.5% PAYE rate applies only to the portion of monthly income above K37,000, rather than the employee’s entire salary. Together, the proposed revenue measures are expected to generate an additional K10.8 billion.
These changes involve real sacrifices. Government must therefore ensure that every additional kwacha delivers value.
The Myth that mines don’t pay tax or have tax holiday
The claim that mines do not pay taxes is misleading. Mining companies contribute through mineral royalties, corporate income tax where taxable profits arise, and applicable local authority rates and levies. Mineral royalty is charged on mineral production value rather than profits; it is not technically a windfall tax. The 2027 Budget projects K22 billion in mineral royalty revenue and proposes increasing withholding tax on mining company dividends from zero to 15%.
Tax obligations apply to both Zambian and foreign investors according to the relevant law. Rates and incentives can differ by activity, but foreign ownership does not create a general exemption.
But why argue that taxes eventually fall?
Because a larger, more productive economy can generate more revenue at lower rates. Consider a simple illustration: a 20% effective tax rate on a K100 billion taxable base produces K20 billion. If that base expands to K150 billion, a 16% effective rate produces K24 billion.
The rate falls while revenue rises.
This is possible, not automatic. It requires economic growth, stronger compliance and spending discipline.
Let us therefore remain vigilant and ensure that everyone who owes tax pays their fair share. Employees, professionals, traders and large corporations must meet their lawful obligations. When compliance broadens the tax base, government has more room to ease rates without undermining services. Honest taxpayers should not continually carry the obligations of those who evade payment.
Our predecessors sacrificed to secure independence and build national institutions, including universities that continue to educate generations. Their contributions created opportunities many of us enjoy today. We must show the same resolve in pursuing economic sovereignty.
Political independence becomes stronger when a nation can finance its priorities and create opportunities through its own productive capacity.
I am confident that Grow Zambia will yield results!
Zambia also competes with other countries for investment, tourists, skills and markets. Clean communities, reliable infrastructure, efficient institutions and a healthy, educated population strengthen our position.
Our duty is to make Zambia clean, developed and wealthy for the benefit of all. Paying fair taxes, protecting public resources and demanding results are shared responsibilities in building that future.
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