Fleecing the few

“If a free society cannot help the many who are poor, it cannot save the few who are rich.” John F. Kennedy.

The new income tax law, which took effect from January 1, this year, has a lot against salaried workers. It seems the government has reached the saturation point in widening the tax net to cover as many people as possible to reduce the impact on salaried workers who, for years, apart from the cocoa farmer, have had to bear the brunt of tax payment.

When it came to tax on investment and service tax, because it involves others beyond salaried workers, the government beat a retreat and bent the law to ask the Internal Revenue Service to suspend the collection of the tax, even when Parliament had not rescinded its decision of approving the tax. However, when it came to the petroleum tax, the leadership of workers belittled the intelligence and resolve of workers by being cajoled into accepting the alibi that it was Parliament which passed the law and, therefore, there was nothing that could be done outside Parliament to reduce the tax.

Presently, there are simmering undercurrents of workers agitations over the imposition of certain taxes without schedules as to how much has to be paid. Workers are greatly and hugely exercised except that they do not have a leadership which will pursue their interests for them. Some have resigned themselves but others are murmuring and cursing the labour movement for appearing to have abandoned the rank and file of their membership to their fate. Indeed, accountants are faced with herculean tasks explaining to their managements and workers the implications of some of the new taxes.

The hapless nature of the situation is summed up by one accountant who has within one week sought the services of five tax consultants, visited the offices of the National Pensions Regulatory Authority four times and tasked all the lawyers within his establishment with the responsibility of interpreting the new law to enable him to meet the local union of the company.

“I am afraid that if I do not prepare adequately, the workers would chew me as if the tax will be given to me,” he intoned as he sought the services of a tax consultant and legal luminary outside his place of employment to equip himself with the arsenal to defend himself before the workers.

What are some of the new taxes? The most shocking is that of the end-of- service benefit. Another is long service award. There is also clothing allowance. Indeed, what has compounded the problem is the absence of a schedule for the calculation of the appropriate tax, which means that once the amount involved is in excess of allowable limits then the individual must be charged at 25 per cent. One annoying thing is that despite a schedule for rent allowance, the revenue agency wants rent allowance due workers to be taxed at 25 per cent although the schedule suggests eight per cent and that if the money were to be paid directly to a landlord, the operating tax is eight per cent for residential accommodation.

Until the new tax law, there were taxes on clothing and long service awards. However, end of service benefits have never been subjected to tax until now. It appears there are a few organisations still paying end-of-service benefits outside the three-tier pension. Thus because they are few, they do not have the numbers to ruffle the feathers to cause jitters to government, so they may either silently protest or cry against the new tax.

Many of the affected workers are wondering whether they have been abandoned by the Trades Union Congress or that their concerns do not matter. Whatever the situation, it is imperative that the TUC enters the fray because the congress survives on workers dues. If the leadership of workers thinks that the tax is appropriate, then it must take it upon itself to inform and educate workers so that the burden is not left on the shoulders of managements, especially those in charge of finance, to bear the brunt of the anguish of workers.

But even if the taxes are necessary and critical, there must be a schedule such that end-of-service benefits, clothing and long service awards will not be taxed at the same level as monthly salaries. The tax must be graduated and charged separately rather than being added to the salary and taxed at the maximum level.

The TUC must awaken from its slumber. It must appreciate that all taxes are sanctioned by Parliament. If the executive could unilaterally suspend tax from investment income and reduce service tax outside parliamentary processes, the same must be done for petroleum taxes, end-of- service benefits, long service awards, clothing allowance and rent allowance.