Govt fails to slash PAYE to single digit yet again

28Jan 2016
Our Reporter
The Guardian
Govt fails to slash PAYE to single digit yet again

The government has lowered Pay as You Earn (PAYE) income tax by one per cent bringing it down to 10 per cent.

Minister for Finance and Planning, Dr Philip Mpango

The announcement was made yesterday in Parliament by Deputy Minister for Finance and Planning, Dr Ashatu Kijaji who said the lowered rate comes to effect this July when the new financial year starts.

She was responding to a question by CCM special seats MP Hawa Mchafu who wanted an update on government’s pledge to lower PAYE to a single digit.

Dr Kijaji reminded the House that the government has been reducing PAYE from time to time, in 2006/07 the PAYE was at 18 per cent it was lowered to 15 per cent in 2008/09, then 14 per cent in 2010/11 and then down to 12 per cent in 2012/13 and following the drop last year it now stands at 11 per cent.

“However, those who are in the top ladder of the workforce and take home hefty packages will continue to be deducted 30 per cent of their salaries in PAYE,” clarified the deputy minister.

Responding to a question by Mtambile MP, Masoud Abdallah Salim (CUF) who queried why the government is failing to disburse pension allowances that reflect the current costs of living, Dr Kijaji said in July last year, the government increased monthly pension allowances by 100 per cent from 50,114,43/- to 100,125/-.

“The government has managed to increase the allowance five times since 2004, when the retirees were being paid 21, 605/-” Dr Kijaji pointed out.

She also reassured public servants that the government is committed to improving welfare of retired civil servants by increasing their monthly pension allowance this dependant on the country’s economic growth.

While campaigning for office last year, President John Magufuli promised that he would reduce PAYE tax charged on employees’ salaries in a bid to improve workers’ welfare. However despite the reduction, the pledged single digit has not been achieved.

Civil servant and private sector employees, through their trade unions, have been at loggerheads with the government with the former pushing for a substantial reduction of PAYE.