Dear
Editor,
Please
allow me space in your newspaper to add my voice to the call made by GCCI
president Muhamad Jagana for the new Gambian government to review taxes
especially the payroll tax on the Point Newspaper of Tuesday 6 June 2017. Mr
Jagana could not have said it better when he said, “This will make it possible
for people to have more disposable incomes, spend more money on their lives,
improve their quality of living and also help to gel the economy”.
These
are very important considerations and I could not agree more with Mr Jagana
that reviewing the payroll tax for a better regime where low income earners are
not penalised for being in a low-income bracket is necessary. I want to talk a
bit more about the unfair nature of the Gambian payroll tax system and I will
do this looking at how employment income is taxed in the Gambia.
According
to the PKF Individual Country Tax Guide 2016/17, anybody with a monthly income
of D1,500 will not pay tax but any amount in excess of this will attract tax at
varying levels of 5% to 30%. PKF has stated in its guide that “tax is payable
on the gross employment income of an employee monthly”. However, I will
disagree with this statement and I will give my reason for the disagreement a
bit further in this write up.
Mr Jagana just hit the nail on the head and I
think the new government should prioritise this review to ease the burden on
low income earners. Living cost is very high in the Gambia and I have done a
guesstimate of this for a small family of 5 living in Busumbala and the
breadwinner working in Brikama.
This
is just an assumption that the family lives in their own home, spends a bare
minimum on basic things with school fees, clothing and medical bills excluded.
Bag
of rice last 1 month = D1,200, fish money for a month = D1,500 (30 days x D50),
travel cost to and from work for a month = D320 (20 days x D16), electricity =
D500.
As
can be seen from the above basic things, the total living cost is assumed to be
D3,520. This is far more than the per capita income reported by the World Bank
Group in 2014 of D1,533 per month (($460 a year x D40) / 12 months). From the
above analysis, a small family needs at least D3,500 to survive at the brink of
poverty. If the average income is £1,500 a month as stated by the World Bank,
then poverty is the order of the day as families will not be able to look after
themselves.
Coming
back to the statement by PKF that tax is applied on gross monthly income, I
will use the recent payslip of the Honourable Minister of Tourism which
featured on the Freedom Newspaper of 5 April 2017 to argue that this is not the
case. It is worth noting that I have not seen any rebuttal from the Accountant
General’s department neither from the minister himself on the validity of this
payslip. On that note, I hold that the payslip is genuine and valid.
On
the said payslip, the minister is paid a basic salary of D29,333, Telephone
Allowance of D5,000, House Rent Allowance of D5,000 and Responsibility
allowance of D10,000. This gives a gross salary of D49,333.50 including a
rounding of D0.50. The payslip shows a net salary of D41,567, meaning a tax
deduction of D7,766.50. If we are to rely on the statement of PKF that tax is
based on gross pay, then the minister’s salary will be taxed at 30% being
income range above D58,000 per year. Therefore, the tax to be deducted from the
minister’s salary should have been D14,800.05 but only D7,766.50 was deducted
hence why I conclude that Gambia’s income tax regime is flawed and open to
abuse by people in authority.
I
have tried to establish the tax rate used on the minister’s salary but find
myself chasing my own tail. Tax of D7,766.50 appears to be 26% of basic pay or
16% of gross pay. This is not in line with the PKF guide and the rate should
have been 30% on basic or gross pay.
The
government should note that the current income tax regime is flawed and open to
abuse. All it takes is a clever accountant to pay himself and the senior
executives lower basic salaries and increased allowances. This way, they will
pay less tax and go home with pockets full of money. The poor low income earner
who is not privileged to have allowances will be taxed on their meagre
earnings. Have you ever wondered why the rich are getting richer and the poor
getting poorer? Well, here is an example.
I
am recommending to the Gambian government to raise the Personal Allowance (Tax
Free Allowance) to D3,500 (basic living cost) and apply tax on gross earnings
and NOT basic salaries. I know critics will say that raising Tax Free Allowance
will mean less tax revenue for GRA but this will be more than compensated by
the extra tax revenue to be generated from fat cat directors and high income
earners.
Before
anyone attacks me, please note that this write up is not aimed at any
particular person and I used the Tourism minister’s payslip because it is
available in the public domain. The new government needs support in
highlighting some of these things which I believe some people in authority who
are benefitting from them wont.
I
believe the government should constitute a committee to look at all the tax
regimes from personal tax to Capital Gains Tax, Dividend tax, Withholding tax
etc. If there are resourcing constraints at the GRA, I am willing to
collaborate with them and provide help where necessary. For those who may think
that I am looking for employment, well I am not. I have worked for the likes of
Lloyds Banking Group, Halifax Bank of Scotland, Skipton Building Society and
currently with the fourth largest consumer retailer in the UK with an annual
turnover of £16bn. I believe we all should support the government in any little
way we can whether or not you are in the country.
As
an example, by applying tax on gross income, tax revenue from the Tourism
Minister would be £14,800 per month compared to the D7,800 being deducted. This
is extra D7,000 revenue per month and apply this to all the ministers and fat
cat directors, the tax revenue will be maximised and more disposable income for
poor workers.
As
mentioned before, this piece is not aimed at anyone but If anyone is offended
by it, I make no apologies.
Thanks
for the space and keep up the good work.
Nuha
Ceesay
Leeds
United
Kingdom
