By Ian K. Mwila
BACKGROUND
This article is written as a commentary reaction to the recent announcement by the Commissioner General of the Zambia Revenue Authority Mr. Chriticles Mwansa – Mr. Mwansa announced that trade tax collection had subsided by 27% in the first quarter of the year as compared to the same period in the preceding year.The announcement was made followed by an explanation by the Commissioner General that this drop was mainly attributed to the ‘elusiveness’ of unscrupulous traders operating across borders who had found ways to evade paying taxes thus the decline.He further stated that this behaviour,”tax evasion” was probably created by the ‘global economic meltdown that was forcing people not to pay trade taxes.” Furthermore, he mentioned that through sensitization campaigns of the importance of paying taxes, an increase in tax collections could be observed in the second quarter of this year and that the Zambia Revenue Authority was not sitting idle, but had ‘put up stringent measures’ that would help with customs data and collection management.
OPINION
While Mr. Mwansa’s work and efforts are greatly appreciated, the ZRA’s operations and structure leave much to be desired.First of all if the Commissioner General believes or purports to believe that the reason why his team was unable to collect the trade taxes according to set targets is attributable to the global economic slow down, unscrupulous traders and a generally unsensitized public, then we have a more serious problem than any one person can imagine.
In my opinion this is just an inch of a two mile stretch and the biggest problem that the Zambian government has including its so called autonomous bodies such as the ZRA, is corruption and the perpetual maintenance and defense of a colonial style of government – the centralized one.[quote]
This system probably worked best when the majority of influence over government resources was in the hands of the minority (colonialists) who felt secure by being in a closely knit environment.
At least there was some justification for this type of inefficient government structure and I personally believe that whatever their intentions were, this system of government, probably served them well.
But in this day and age when all control and resources are in the hands of Zambians, this problem should not be entirely tied to Mr. Mwansa’s reasons.One can clearly attribute such failures and inefficiencies to the levels of corruption taking place in all these border posts and an old system of administration that seems to blind side and cause our leaders into believing otherwise.
Has it ever occurred to the Commissioner that trade tax collections could have been diverted to ventures like “The Best Home lodge” for the Kapokos of this world? Possibly so, but that is not something some people are willing to look at as the main cause of this deficiency.
Since the creation of the Zambia Revenue Authority in 1994 the Zambian government has reported tremendous increases in tax collection because of the decentralization of this unit of government into an autonomous body.
Many people can attest to how helpful this arm of government has been and still is in helping fund government programs, including the lavish life style of the current day politician.The improvement in tax collection mechanisms can clearly be attributed to this decentralization and as long as we continue to focus on insignificant issues as our excuse for our failures, this trend will not go away anytime soon.We appreciated the decision to decentralize the Customs and Exercise Division into becoming its own entity because of the benefits we have seen this has produced over the years,from increased tax revenue for the government and of course the creation of employment.
I can confidently say that we can still do better by decentralizing the operations of ZRA further into ‘Regional Head Offices’ (RHO) were each office is managed independently and mandated with the collection of taxes in the assigned ‘regions’ while away from the main ZRA head office in Lusaka.
Below is a sketch of how this decentralization can be achieved, each RHO would be assigned three provinces as illustrated:
Of course this exercise cannot be achieved overnight as reorganization and decentralization comes with its own costs and challenges. Under this suggested system, the Head Office of the Authority could still be maintained in Lusaka for administrative purposes and also for possibly housing RHO staff for Lusaka, Central and Copperbelt provinces. These Regional Head Offices can be points of contact for all border tax collections taking place in each province and it is through these offices that new swifter sensitization campaigns could be executed.
Overall these offices could execute all non-administrative and probably a small portion of administrative functions that are currently being run from Lusaka hundreds of miles away from the main points of activity.The effects of such a new structure and system could be felt within a reasonable time space and surely government and the entire ZRA board are encouraged to consider this option.
EXAMPLE
For example, to alleviate the incidences of corruption on border posts and discourage huge amounts of taxes being collected by almost every employee of ZRA and also diverting these funds; it would be wise for the ZRA to consider a system whereby individuals and businesses are encouraged or more confidently informed that all taxes will be paid at these centers:
For instance, if I chose to purchase an automobile outside the country, a system could be put in place where I am required to go to the RHO port of entry and get a one-time-importation license that requires me to pay provisional taxes attributable to my importation based on the description that I give and use during my license application.
On my return with an automobile, the vehicle could be held in bond at a ZRA holding facility at the port of entry for a period not exceeding 72 hours until the vehicle can be cleared through screenings with the Interpol for vehicles reported as stolen in neighboring countries.
Within this period the buyer should have been given adequate time to travel to the RHO to present his title (Blue book) and also an inspection license and photographs from the customs officer describing the vehicle in detail (Data collection) and allowing the ZRA to determine the importer’s correct tax liability or whether a refund is due on the provision taxes I had previously paid, before a clearance certificate can be issued.
Note that this system eliminated the need to make payments at the port of entry thus reducing the most likelihood of corrupt practices recurring as all payments regarding imports could be handled by the RHO which we hope can operate equitably and independently towards the citizens of Zambia. A small portion of the payment can still be made to the border authorities for storage of the vehicle for each of those three days that the vehicle is held as is the case today.
Ok I see your intentions. Well written article and well intetions, but you you have smoked too much of this decentralisation without inhaling it. As much as decentralisation is good, the structure can’t be supported in Zambia because skilled laboured, which is key to this whole process is not avaliable in some of the areas you want decentralisation devolved to. Most skilled people wont want to live in Chirundu. As MMD we have noted these problems and are working on policies to try and increase skilled resources so that there is competition in urban centers and hopefully this competion can cause some skilled labour to spill into these remote areas, then decentralisation will make sense. For now it is difficult. Just look at the councils across the country. Skills are pathetic
RHOs exit except they are not independent. A decentralied systemcan work but you need alot of work before this can bare fruit and increase revenue collection as you suppose, mind we are now in a COMESA FREE TRADE AREA! Rethink your strategy and focus in terms of what is really happening on the ground. Corruption is just one factor in revenue collection and you should also accept that compliance amongst the zamabian taxpayers is very low and this accounts for the larger part in reduced revenue collection in Zambia.
Well I am lost as to how these RHOs are supposed to operate. Does it mean that in each province there will be one or that there will be three RHOs in total? If three RHOs are being proposed, is it not that we are transfering congestion from border points to RHOs? Whatever form of decentralisation is being proposed is not clear because it assumes tax evasion will be reduced through creation RHOs. One other option apart from the above (which I confess I have not understood) is to go electronic. It would be worthwhile to introduce a strict use of cash registers whose key faetures should be regulated and prescribed by ZRA. For example, if a batch if say cartons of soap is imported, you could give it a code which has to be traced through it route to the point of sale.
#3 Contd Now, that is interesting because wholesalers have been made to go scotfree because most if not all do not have cash registers which could be used to track the exiting of the coded batch to the retail stream. By so doing ZRA could collect a lot of revenue. That said, the same can be worked out for other imports but as #1 has noted, there would be need for a greater education of both the taxman and the taxed in the adherance to cash registers. This is where people should be more vocal when it comes to ICT, not to think ICT is learning to type on a computer.
My point precisely is the Republic of Corruption. Let us address the vice before it becomes malignant needing chemotherapy.
“For example, to alleviate the incidences of corruption on border posts and discourage huge amounts of taxes being collected by almost every employee of ZRA and also diverting these funds”……………………………. Well,Are you aware that ZRA just collects on behalf of the Govt & it is not responsible for the “high taxes” What problems have you encountered lately because there been changes in ZRA structure that addresses your concerns.
ZRA is the only service providing institution whose members of staff who still want to be treated like dons and they look upon you a tax payer like a bother and all the coolies want to lead a pop star kind of life.elo ba mbuli nalibalishamo sana nkayafye mukufwaya refund manje yavunduka.