Sus­pen­sion of 5-yeartax hol­i­day to earnS­tate cof­fers more

Daily Nation Newspaper - - BUSINESS WORLD - By BUUMBA CHIMBULU

THE abol­ish­ment of the five-year in­come tax hol­i­day by Gov­ern­ment will en­hance its abil­ity to col­lect the much needed rev­enues for pro­vi­sion of pub­lic ser­vices, says the Cen­tre for Trade Pol­icy and De­vel­op­ment (CTPD).

Dur­ing the pre­sen­ta­tion of the 2018 na­tional bud­get with a to­tal cost of K71.6 bil­lion, Min­is­ter of Fi­nance, Felix Mu­tati, pro­posed to abol­ish the five-year tax hol­i­day.

In place of the tax hol­i­day, Mr. Mu­tati pro­posed to grant ac­cel­er­ated de­pre­ci­a­tion for cap­i­tal ex­pen­di­tures by qual­i­fy­ing in­vest­ments in pri­or­ity sec­tors.

The bud­get re­quires ag­gres­sive ef­forts to­wards broad­en­ing the coun­try’s tax base and the phas­ing out of tax in­cen­tives such as the tax break is one such mea­sure.

CTPD ex­ec­u­tive di­rec­tor, Isaac Mwaipopo, said the pro­posed scrap­ping of the five-year in­come tax breaks by the gov­ern­ment could as­sist in in­creas­ing and im­prov­ing eq­uity within the tax sys­tem by fur­ther re­duc­ing the bur­den on for­mal em­ploy­ees.

“Nu­mer­ous tax in­cen­tives have led to a poor per­for­mance of taxes col­lected through cor­po­rate in­come tax and led to over bur­den­ing of taxes from low to mid­dle in­come earn­ers who are the largest con­trib­u­tors to the tax base,” he said.

Mr. Mwaipopo said tax in­cen­tives should be min­imised and their ap­pli­ca­bil­ity must be re­stricted to where there was proven ben­e­fit out­weigh­ing costs as they could be an av­enue upon which colos­sal loss of tax rev­enues could take place.

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