Finance and National Planning Minister Dr Situmbeko Musokotwane has reiterated the government’s commitment to strengthening Zambia’s tax base through the introduction of a Minimum Alternative Tax (MAT), emphasizing its role in ensuring that the informal sector contributes fairly to the national economy.
Speaking during the parliamentary debate on the Income Tax (Amendment) Bill, which passed its second reading on Friday, Dr Musokotwane addressed growing concerns that the burden of taxation has disproportionately fallen on the formal sector. He explained that the MAT is a strategic move aimed at balancing the scales by encouraging greater tax compliance from businesses and individuals operating outside the formal tax net.
“There has been a long-standing complaint that the formal sector is being overtaxed, while the informal sector contributes little or nothing. The Minimum Alternative Tax is one of the ways we are addressing that imbalance,” said Dr Musokotwane. He stressed that expanding the tax base is not only fair but also necessary to create a more sustainable and inclusive economy.
The minister also referenced Zambia’s fiscal challenges, including the need for a supplementary budget to manage outstanding public debt. He noted that many of the financial pressures the country currently faces stem from historical debt obligations.
“Let me remind us why a supplementary budget was necessary. It became essential to deal with the debt burden, much of which was inherited from the previous administration—some of whom are now the loudest critics. But we’re not here to apportion blame. The reality is that these debts must be managed, and that requires resources,” Dr Musokotwane stated.
He also pointed to the consumption of fuel as an example of past decisions that had long-term fiscal implications. “Those fuels brought into the country were consumed, and now the bills must be paid. The Minimum Alternative Tax, along with other reforms, helps us meet these obligations without continually squeezing the already taxed formal sector,” he added.
The new tax mechanism is part of broader reforms aimed at enhancing revenue collection, reducing dependency on external borrowing, and improving public service delivery. By bringing more players into the tax system, the government hopes to fund critical development priorities while ensuring economic equity.
With the Income Tax Bill advancing in Parliament, Zambia moves closer to reshaping its tax landscape in a way that reflects its evolving economic realities.