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The GRA must know that the personal allowance and the rates of tax payable under the Income Tax Act are set out in different sections of the Act and it is a marvel of imagination to represent to the unsuspecting public that an amendment to one section automatically extends to another. What the government is seeking to do is limit the tax savings of everyone to no more than $400 per month. It is unbelievable that a government committed to the working class can be so insensitive to their plight when one considers the effect of inflation even using the official statistics. Let us take an example of a person who had a net income of $25,000 per month in 2002 all of which was spent. That person’s net income will go up by $400 per month but the same expenditure basket would now cost him $26,525. He is now worse off by $1,125 per month! Did the government consider this? So much for the consultations with the TUC.
In addition to the effective date issue pertaining to the withholding tax proposals, there are two other matters which are to be resolved. The first relates to whether it applies to withholding tax on payments to non-resident contractors under Section 10(b) of the Corporation Tax Act. Neither the Minister nor the GRA give any indication that this has been considered and the public is left guessing.
The other issue is whether the proposal applies to payments made after April 1, 2003 or to liabilities arising after April 1. For example, how does the proposal affect a management fee in respect of the month of March paid in April? Should withholding tax be paid at the new, higher rate or at the rate prevailing when the liability for the payment of the management fee arose? According to our headless GRA, they are quite clear on the matter that all payments (other than interest) made to non-residents would be subject to tax at 20 per cent.
It takes no consideration of accruals made for payments but not yet paid for periods ended March 31, 2003 and if it is logical that these payments be subject to a higher rate of tax. This is the sort of clarification which one would have expected from the GRA and which could legitimately be considered extra-statutory concession.
Business Page understands that the telephone service providers had no prior notice of the consumption tax on local calls and were therefore given one working day to make the necessary amendments to their billing programme. Is this the “support for the private sector” the Minister described as a priority in his speech?
The advertisement is most unfortunate and will do little for the respect which the public has for the GRA. Most people consider the system inherently unfair with the self-employed getting away with gross evasion while the employed person bears the brunt of the tax burden. The GRA must be seen to operate within the spirit and the letter of the law and refuse to compensate for the gross oversight of those concerned with the preparation of the Budget and its appendages.
If the GRA is serious about going after the tax dodgers who are generally well known, then it must demonstrate that it is committed to proper behaviour. It will end up with egg on its face if someone was to challenge this unusual order.