THIS IS DOUBLE TAXATION - ECONOMIST

MBABANE – There is no country where double taxation is legal.  This was the assertion of an economist after analyzing the Finance Bill, 2018, tabled by the Minister of Finance, Martin Dlamini.

 The economist, who will not be named as he is not mandated to address the media, made the comment after analyzing the proposed schedule when it comes to Graded Tax.

He said it looks more like a pay-as-you-earn schedule mainly because the amount to be paid was broken down into different income brackets.
Under the proposed schedule those earning less than E8 333.34 per month would pay E20.85 in grade taxes per month or E250.20 per year, while those earning between E8 333.33 and E16 666 per month would have to pay E31.25 per month or E375 per year.

 This is an increase of E18, which he said should have been scrapped a few years back while the current Central Bank Governor, Majozi Sithole, former Finance Minister, who said collecting the tax was expensive and tedious for government as it turned out to be more expensive than what they collected.

Ideally

He explained that ideally Graded Tax has been defined as a tax that is paid by everyone who is above the stator limits and is a resident of a country, whether in receipt of income or not.

This form of tax is used to cater for some of the necessary amenities needed by citizens on a daily basis, including having a government in place.
Locally one of the means of detecting if someone was paying income tax was through the use of a graded tax number, which-in the past-was a requirement for a number of things including getting a passport, a licence and employment.

    “The new graded tax system will be based on salary, the higher you earn the more you pay. This is no different from the pay-as-you-earn (PAYE). This becomes double taxation because income taxes are paid on the same source of earned income.  Given the financial challenges the country is faced with, government is desperate to raise funds and has done this through reviewing Graded Tax, which unfortunately comes in the form of pay-as-you-earn.”

He noted that had government directly proposed an increase to pay-as-you-earn, there probably would have been protests thus opted for other means, thinking the public would not notice.
The repercussions of this decision of increasing taxes will dire effects on the country at different levels.

“But before I get into that, what I find strange is that the challenges to be addressed by the increase and implementation of taxes were not presented by the ministry. This makes it difficult to understand why the taxes are being increased if the status quo remains. We need to know where the money is going.”

  With over 200 000 people said to live in poverty, the economist said the proposed Graded Tax schedule would worsen the situation.   This, he said, would be because low earners would now be subjected to paying large amounts of taxes even though they earn very little and could sometimes be outside the PAYE tax bracket.

The E250.85 per year that they have to pay will be high for them exposing them, to poverty in different ways.
Increase
“The increase coupled with the increase in value added tax will expose people to more poverty as they will be faced with the burden of over taxation. The money that could have been used to support families, purchase food, provide for the necessary needs will now be diverted into the payment of taxes, PAYE, graded tax and VAT.”

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