Taxes, PAYE and exemptions: When bulls fight...

04May 2016
The Guardian
Taxes, PAYE and exemptions: When bulls fight...

Tax - Compulsory monetary contribution to the state's revenue coffers imposed by a government on individuals, companies and organizations.

Not that we need a reminder of what taxes are but rather we do need a reminder every so often as to why we pay taxes in that first place.

So we pay taxes for the ‘common good’, as long as you contribute, then the theoretically the government can build and maintain infrastructure and provide social services for all, it’s a ‘one for all and all for one’ idea.

However, despite the taxes we pay for our property, for our business transactions, for what we buy and even for the salaries we make, we are all too familiar with empty water taps, rough roads and never ending blackouts not to mention hospitals without medicines and schools without teachers, desks and chairs, the list of un-met social services is never ending.

So if tax is compulsory, the end result, the reason why we pay taxes should also be compulsory, that is to say, if we are penalised for not paying taxes then the government ministries and departments should also be penalised for social services that are not delivered.

Yet with President John Magufuli, we are seeing so much of tax evasion culprits brought to light every other day, it makes being a journalist so much easier because every reporter is assured of a front page story whenever the ‘bulldozer’ visits a public office.

What we are not seeing however, is public officer brought to task for a road that is rough, for power cuts etc just like we are penalizing tax evaders, we should penalize not just the corrupt officer caught in the act but also officers whose deliverables have not been met and lack of funds cannot be an excuse because, we pay taxes.

Then comes the issues of PAYE, yet another tax we pay, oh, the many sources of revenue for the government! PAYE stands for Pay As You Earn, we are forced to pay taxes even for the money we make!

For the first time in the country’s history, PAYE has been lowered to a single digit, now while that is reason for celebration, it still leaves much to be desired as to the dismal reduction of a mere 1 per cent reduced once per year with exception of President Magufuli’s 2 per cent reduction.

The PAYE tax bracket ranges from the now 9 per cent (the lowest) to 30 per cent (the highest) of your salary. The predicament comes at this highest level, the 30 per cent is charged on anyone who makes any amount above 720 000/- that is to say, if you make 1 million, you pay 30 percent of your salary as PAYE tax and that is the case even if you earn 6 million or more.

As the middle class grows, there is need to revisit the entire PAYE regime and as many an employee would agree, scrap it all together, except for those who make the 6 million and above of course.

Finally is the matter of tax exemptions in the name of luring investors. Only yesterday, headlines were on the trillions the country is giving away in tax exemptions to multibillion dollar companies.

So the deal is, we charge the little man who makes 170 000/- 12 per cent (the 2 per cent reduction doesn’t come into effect until July) of their salary then we don’t charge entire companies so that they can create jobs for the little man and we can in turn tax him.

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