Are Zambia's Tax Laws Adequate and Effectively Applied in raising revenue for the Government to reduce poverty?
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Economies across the world depend on resources collected from both direct (Income Tax and Company Tax) and indirect taxes (Value Added Tax, Excise and Customs Duties) to finance Government activities. No Government can be sustained without mechanisms for generating domestic revenue. It is a trite observation that taxation is the only rational means of raising revenue to finance Government spending on goods and services and in the redistribution of wealth or income. Taxation also plays a pivotal role in encouraging economic growth and reducing disparities between the rich and the poor, and reducing poverty. This obligatory essay examined as to whether or not the existing tax laws are adequate and effectively applied in raising revenue for the Government of the Republic of Zambia to reduce poverty. Further, the essay examined and considered whether the establishment of Zambia Revenue Authority (ZRA) has yielded its intended purpose and whether the enforcement of the tax laws by ZRA was a reality or mere fallacy.Furthermore, the dissertation attempted to examine whether Government was allocating enough resources towards poverty reduction. In addition, the research examined and considered whether or not it was necessary under the circumstances to broaden the tax base by reforming the existing tax policy in order to enhance revenue collection. The study discovered that, most tax laws in Zambia do not satisfy the principle of adequacy and are not fairly applied to all the eligible tax payers. Further the study established that, in its quest to generate sufficient revenue, ZRA is on the right track in so far as realizing its intended purpose is concerned. However the enforcement of the tax laws has not been satisfactorily done owing to the inadequate legal framework under which ZRA operates. Furthermore, the essay also discovered that Government's resource allocation towards the priority sectors of fell below the Fifth National Development Plan FNDP set targets. Therefore the study recommends that Government should take significant steps to strengthen the legal framework for sound fiscal policies particularly on tax reforms which constitute the major policy instruments needed to accelerate growth and eliminate poverty and promoting a better tax system to mobilize more revenue.
- Law