ZRA must curb smuggling, up tax compliance

ZRA must curb smuggling, up tax compliance

IT IS regrettable that the government has continued losing millions of kwacha through the smuggling of goods and tax evasion by some unscrupulous people. Tax evasion and smuggling are denying the government the revenue it needs to fund social services like healthcare, education and other initiatives that support our country’s most vulnerable citizens. It should be curbed immediately.

Taxes are important as they provide the government with a sustainable stream of income to support social programmes like construction of roads, schools, hospitals and other vital infrastructure, as well as buying medicines for the people.

The government also pays civil servants—such as doctors, nurses, teachers and other technocrats—with tax money for services that are essential to the nation’s development progress.

Government also uses tax revenue to pay civil servants like doctors, nurses, teachers and other technocrats who provide essential services which are vital for the country’s socio-economic development.

To put it simply, the government uses tax money to fund services and programmess that are necessary to fulfil the shared objective of creating a prosperous, functional and orderly society.  Additionally, in order for the government to provide these goods and services, taxes must be collected.

However, because of the widespread smuggling of goods, the government’s capacity to provide these services to the people is compromised, which often leads to a disgruntled populace.

Taxes are also a vital component of the social contract between the economy and the citizens. The legitimacy of a government can be determined by how taxes are collected and spent.

It is for this reason that we are concerned that the Zambia Revenue Authority (ZRA) has lost K2.8 million revenue through smuggling.

The authority said it had lost the money through the illegal importation of 3,660 cases of alcoholic beverages among into the country by smugglers, which was however intercepted.

The contraband of alcoholic beverages consisted of Gordon Dry Gin, Jameson Whisky, Four Cousins, Amarula, Jack Daniels and Tequila.

ZRA intercepted a truck which was carrying a 40-foot container loaded with the beverages.

“Working in collaboration with other stakeholders, the ZRA enforcement team conducted a targeted stop of a truck bearing registration details BAR802ZM/BAL6564ZM. The driver was unable to produce valid customs clearance documentation, claiming the documents were left behind,” read the statement.

“The truck and its cargo were immediately escorted to the ZRA Controlled Premises – Makeni Enforcement Centre for thorough verification. Subsequent verification confirmed the consignment as smuggled goods containing 3,660 cases of assorted alcoholic beverages, including Gordon Dry Gin, Jameson Whisky, Four Cousins, Amarula, Jack Daniels, and Tequila. The estimated revenue loss is K2.8 million.”

According to ZRA, Zambia’s personal income tax rate is 37 percent. From 2013 to 2025, it averaged 36.65 percent, peaking at 37.50 percent in 2017 and falling to a record low of 35.00 percent in 2014.

We are of the view that some people engage in smuggling and tax evasion because of the high taxes and the stringent tax policy measures put in place by ZRA. Although we acknowledge that all citizens are required by law to pay taxes, the government, through ZRA, should reconsider its strict tax policy measures and adopt innovations that will promote compliance.

In addition, the government should work towards broadening the tax base so that both the formal and informal sectors contribute taxes.

In our opinion, it is important for citizens to adhere to regulations to maintain the country’s functionality for everyone and to fund services and initiatives that enhance people’s lives. But to achieve this, government regulations should be as straightforward and clear as possible to promote compliance.  It has been proven that smuggling and other high-level tax evasion are directly linked to tax systems that are too complicated. ZRA should work at resolving this.