Tourism Council of Zambia (TCZ) has said the recent increase in the minimum wage for workers and the anticipated trimming of the workforce by some companies, will result in the reduction of Zambia’s tax base.
TCZ chairperson Felix Mulenga said in Lusaka that because of the reduction it would contribute to higher taxes as only few people would be contributing to the national treasury.
Mr Mulenga was speaking in the wake of reports that more than 6,000 people especially in the hospitality industry, would lose jobs because of the minimum wage issue.
“There is no argument about it, the more people in employment, the bigger tax base and the lower tax rates, in a small economy like ours we need more people in employment and after the jobs are lost how then and when will the Government meet its target of creating one thousand jobs?,” he asked.
Mr Mulenga said in as much as the increase was a good thing, most operators especially in the hospitality industry, would opt to cut down on their work force.
He said small and big operators would trim the work force as a way of cushioning the increased minimum wage.
“Most operators will cut on their work force following the increase in the minimum wage and about 6,000 jobs are expected to be lost in Zambia, this will range from small to big operators as this will be the only way they would adjust the salaries,” he said.
Mr Mulenga, however, said the Government should find other means and ways of getting tax from the informal sector.
The Government had no means of collecting tax from Zambia’s informal sector which had the potential to contribute meaningfully to the national treasury.
“All in all, there is need for the Government to find ways in which it can collect tax from the informal sectors, you may know that as at now it has no capacity to do so,” he said.
Last month the Government announced the revised Minimum Wage and Conditions of Employment Acts for various categories of workers following the amendment of statutory instrument order Numbers 1, 2, 3 of 2011.
The revision means that wages for various categories would have to be revised upwards.