ZCTU SEEKS K10,000 TAX-FREE THRESHOLD AS WORKERS STRUGGLE WITH COST OF LIVING

By Alain Kabinda

LUSAKA – As the cost of living continues to put pressure on household budgets, the Zambia Congress of Trade Unions (ZCTU) is calling for tax reforms that would leave workers with more money to meet their basic needs.

At the centre of the union's demands is a proposal to increase the Pay As You Earn (PAYE) tax-free threshold from K5,100 to K10,000 a month, alongside changes to the education system aimed at equipping graduates with skills that match the demands of the labour market.

ZCTU president Blake Mulala says workers should benefit more directly from the country's economic reforms, including progress in debt restructuring, through tax relief, improved public service allowances and better employment opportunities.

He believes the proposed creation of a standalone ministry responsible for skills development, colleges and universities could also help address the mismatch between qualifications and available jobs.

Further the Union urges Government to balance domestic revenue mobilisation with measures that protect low-income earners from the rising cost of living.

For the ZCTU, the current PAYE threshold does not adequately reflect the financial pressures facing workers, particularly those whose monthly earnings are barely sufficient to cover food, housing, transport and other essentials.

Mr Mulala said the union had consistently advocated for changes to the tax regime, with the proposed increase to K10,000 intended to bring the tax-free threshold closer to the monthly basic needs basket.

“We have been advocating for a change in the tax regime. We proposed or we expect to see that the PAYE must have an increase in the minimum threshold from the current 5,100 to 10,000 and this is to align it with a monthly basic needs basket,” he said.

Mr Mulala illustrated the pressure by referring to a worker earning K9,200 per month, arguing that deductions leave the employee with income below the estimated basic needs basket of about K10,000.

He said the existing tax arrangements place a disproportionate burden on low-income earners and called for adjustments to the tax bands to increase disposable income.

Under the proposed structure, the ZCTU wants monthly earnings of up to K11,000 to be tax-free, with income between K11,100 and K14,000 taxed at 15 percent and earnings between K14,000 and K18,000 taxed at 20 percent.

The ZCTU has also linked its demand for tax relief to Zambia's debt restructuring efforts, arguing that workers should experience tangible benefits from improvements in the country's economic position.

Mr Mulala said workers had endured considerable financial pressure and deserved to benefit from the progress made in addressing the country's debt challenges.

“Why do we make this expectation? To share what we achieved in debt restructuring, we expect that workers also should significantly receive a tax relief from that successful story,” he said.

The union's position is that economic reforms should not be measured solely by improvements in public finances, but also by whether ordinary citizens experience better living conditions.

Mr Mulala further called for increased resources towards public service allowances, saying current allowances were inadequate to help many workers meet their basic needs.

He said the situation required attention because a significant number of public service workers continued to earn below the monthly basic needs basket measured by the Jesuit Centre for Theological Reflection.

Also  ZCTU has welcomed Government's proposed realignment of ministries to establish a standalone ministry responsible for skills development, colleges and universities.

Mr Mulala said the union had long advocated for skills development to receive greater institutional focus rather than being grouped within a broad ministry.

“For too long we have been calling for skills development and I think when you have skills development you cannot group all these into just one ministry,” he said.

He argued that bringing universities, colleges and skills development under one institutional framework could improve coordination between education and the world of work.

According to Mr Mulala, some people struggle to find employment not necessarily because they lack qualifications, but because their training does not match the skills required by employers.

“From skills development when we go to the job market, where people fail to get jobs, not that they are not required, not that they don't have skills, but there has been skills mismatch,” he said.

Mr Mulala said the realignment should also promote accountability and effective leadership, insisting that competent individuals must be appointed to manage the institutions.

ZCTU has commended Government's efforts to increase domestic resource mobilisation and reduce reliance on external financing.

Mr Mulala praised the Minister of Finance for the increased emphasis on locally generated resources to finance the national budget.

“We congratulate the Minister of Finance because there has been a shift. Most of the budget was actually locally funded, domestic resources unlike in the past where most of the budget was funded by external partners. This is a good move,” he said.

However, he argued that Government could not continue placing the burden of taxation primarily on the relatively small formal working population in a country of more than 21 million people.

He called for measures to broaden the tax base and strengthen revenue collection, allowing the country to mobilise more resources without placing excessive pressure on salaried workers.

“Government must maintain sufficient revenue to finance public services and development while considering tax changes that could reduce collections from personal income taxes,” He said.

The ZCTU has also welcomed President Hakainde Hichilema's pronouncement on the digitalisation of Government services and ministries, saying technology could improve efficiency and strengthen public accountability.

Mr Mulala said digitising government processes could help increase revenue collection and reduce opportunities for corruption associated with manual systems.

“We want to also commend the Head of State on the pronouncement of digitalisation of Government services and ministries. That's what we lacked. It will help to increase revenue collection and eradicate corruption which has been going on when people were relying on manual processes,” he said.

The ZCTU's proposals highlight the connection between taxation, education, employment and household welfare.

A higher tax-free threshold could leave eligible workers with more disposable income, while better coordination between training institutions and employers could improve the prospects of graduates entering the labour market.

Mr Mulala said the measures advocated by the union should ultimately improve workers' living standards and help them withstand internal and external economic shocks.

For Zambia's workers, the debate goes beyond tax percentages and ministry structures. It concerns whether salaries can meet basic needs, whether education leads to meaningful employment and whether economic reforms translate into a better quality of life.