Sunday, December 01, 2013

PAYE threshold increase to affect revenue - Kadiresan
By Gift Chanda
Sun 20 Oct. 2013, 14:00 CAT

THE World Bank says the Zambian government’s decision to increase the PAYE threshold by 36 per cent will have a significant dent on revenue receipts.

And the World Bank has hailed plans by the government to impose a two-year freeze on wages in the civil service, saying the move should help moderate the rising wage bill.

What is the World Bank doing to raise the demand side of goods within Zambia? Oh I forgot, they are still stuck on stupid (or should I say - CORRUPTION) with their supply side economics. - MrK

Commenting on the 2014 national budget, the World Bank said it recognises the government’s efforts to control the wage bill expenditure, the fiscal deficit as well as generate higher revenues next year.

The government, which has increased the annual threshold of exempt income by 36 per cent to from K2,200 to K3,000 per month - or K36,000 from K26,400 annually - plans to impose a two-year freeze on wages and hiring in the civil service, as it targets to narrow the budget deficit to less than 6.6 per cent of Gross Domestic Product (GDP) next year and free up fiscal space for spending on basic social services and infrastructure investment.

“These steps will enable the government to maintain and grow its expenditure on priority activities and at the same time allow it to consolidate its fiscal position,” World Bank country representative for Zambia, Malawi and Zimbabwe, Kundhavi Kadiresan said.

“However, under the current fiscal pressures, the government’s decision to increase the PAYE Pay as You Earn threshold by 36 per cent will make a significant dent in revenue receipts.”

She, however, noted that the planned two-year moratorium on public wages was likely to help moderate the rising wage bill.

“The hiring freeze however has to be balanced in social sectors to ensure that the provision of basic services is not compromised,” she said.

Kadiresan said Zambia faces enormous development challenges led by high poverty levels amidst high economic growth and increased budgets for health, education and social safety nets would help improve opportunities for human capital development by the poor.

“We expect that special attention would be paid to implementation of social sector programmes, and service delivery will be improved to achieve the budget’s intended objectives. In addition, timely release of resources allocated should enhance intended budget outcomes,” she said.

She also noted the scaling up of social cash transfers requires capacity enhancement at the Ministry of Community Development, Mother and Child Heath for effective implementation.

“This capacity would include building up systems such as a holistic targeting mechanism and a single beneficiary registry,” said Kadiresan.

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