Perception of Tax laws in Zambia: A case of Lusaka based tax payers
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Date
2013-10-17
Authors
Namangala, Himulambo Phanwell
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Abstract
Tax laws have been described as among the most sensitive aspects of a county's legal system [Shirley, et. Al. 1966) ] The makers of tax laws perpetually walk a tight rope between putting in place laws that efficiently compel people to relinquish their claims on resources and thus allow government to use them, and avoiding creating undue resentment among tax payers. The philosophy here is that taxpayers' ability to pay taxes should necessarily be perceived as the capacity to pay without undue hardship or unacceptable degree of interference with the objectives that are considered socially important by other members of the community.Therefore, putting in place a tax system which efficiently strikes this delicate balance is a herculean challenge indeed, yet one worth striving for at all costs because tax laws which are perceived as good or at least tolerable by tax payers are crucial to political stability and economic development of a nation.For this reason, tax specialists contend that it is vital to constantly assess the effects of existing tax laws on tax payers, as well as taxpayers' subjective views of such laws. In this way, necessary modifications can be made to the laws so as to minimize what adverse effect they might be having on the tax payers.Tax payers' subjective views and perceptions of tax laws have recently attracted the interest of economist, politicians, political advisers and researchers from various disciplines [Mulenga, M. 2004]. This interest, interalia may have been motivated by the realization that many people find the paying of taxes stressful and indeed a taxing affair. As such taxes have often aroused resentment in many countries, and have sometimes sparked revolt.
The current study examined the subjective effects of tax laws among selected tax entities in Lusaka. In particular, the study aimed at establishing public perceptions of existing tax laws in Zambia, and some of the coping strategies used by taxpayers.Further, the study investigated the awareness of tax authorities of the existence of harsh tax laws and practices in the country. The study used a randomly selected sample of 90 tax entities involving both natural and artificial persons around Lusaka urban and peri-urban. The main tools of data collection were the questionnaire and desk research.The findings of the study show that most taxpayers in Zambia perceive the tax system in the country as excessive, unfair, overwhelming and draconian, and as such they resent it. Many taxpayers surveyed felt that the overall scenario in Zambia was quite bad. It was apparent that resentment against existing tax laws in Zambia was quite entrenched. The gap between the rich and the poor was identified as one of the factors that fuel the fire of resentment. Direct tax, especially income tax is the most resented. One of the most interesting findings made by this study was that resentment against tax laws does not discriminate between high and low socio-economic classes. In other words, the survey revealed that both individuals classified as rich, and those classified as poor equally indicated resentment against the tax laws to such an extent that they are unwilling to pay taxes even if this means that government would not be able to improve the services that are important to them. They claimed that the Zambian tax system is inefficient and unfair, and that proper collection and monitoring mechanisms are either non-existence or existent but not applied, and that this creates opportunities for misuse by tax officers. A major concern expressed by the tax entities surveyed was that much as new taxes are introduced almost every other month, and despite regular increase in amounts of money, being paid in tax, there doesn't seem to be any corresponding improvement in public services provided by government. If anything services continue dwindling, as taxes are raised and new taxes introduced.
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Taxation-law and legislation