Finance, Economic Planning and Development minister Goodall Gondwe has hit on employees receiving monthly salary from K3 million above by imposing a top rate 35% Pay as you Earn (PAYE) while easing the pressure for those who earn less by increasing the tax bracket from K20,000 to K30,000 per month.

Gondwe: Budget delivered

Presenting this year’s budget statement in Parliament, Gondwe said the increase of the tax bracket from K20,000 to K30,000 is expected to cost government revenue in excess of K10 billion and said there was need to explore other means in recouping this loss and found an answer in the millionaire salaried employees.

“In order to improve the distribution of income from the rich to the poor and increase the progressivism of the tax system, government is introducing an additional bracket of 35% on those earning alarmed income above K3,000,000 per month,” said Gondwe.

“I wish to highlight that this top rate of 35% will not affect individuals who earn their income from businesses,” Gondwe clarified quickly.

Earlier, Gondwe announced the increase in minimum wage from K19,000 to K25,000 per month adding that with the increase of the tax threshold, those earning a minimum wage will be below the threshold.

Tax on TV subscription fees

While the millionaire salaried employees will be worried about the cut in their earnings through the additional top rate PAYE, they should also expect to dig deeper in their pockets if they want to enjoy quality television entertainment at home, Gondwe had some disturbing news in this area as well; introduction of a 10% excise tax on TV subscription!

He said excise taxes have a multifaceted function ranging from revenue generation to income distribution and influencing consumption behaviour of the populace.

“To the extent that we are shifting reliance, in the long term, on domestic resources mobilisation from income and investment to consumption tax and to expand the revenue base, we are introducing 10% excise tax on fee based TV services,” said Gondwe.

He however said government is providing free TV services through MBC TV and was pleased that some private media houses are also providing these free TV services.

“The 10% excise tax will be levied on subscription fees paid by only those consumers offee based TV service providers effective midnight tonight,” said Gondwe.

Both the millionaire salaried employees and the ‘normal’ salaried employees will at least afford tea with milk as Gondwe removed Value Added Tax (VAT) on milk after receiving several outcries on the introduction of VAT on milk.

 

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