By Modou L Camara
ACCA, BSc (Hons), CAT
Main theme of the article
It is important that I highlight 3 main themes in this article beforehand and that is (i) fairness, (ii) income tax relieves (iii) and leadership. Before we dive into the details of the article.
Income tax relieves
It is not uncommon for employment income including allowances to be taxable however there are relieves for other related professional or occupational expenses that are allowable or relives given such as professional fees paid to member bodies, occupational clothing (such as gowns worn by lawyers, fitters/mechanics, nurses, doctors) these are seen as “tools of the trade” often when one say tools what comes to mind is something handy like spanners or materials used in a job and we wouldn’t have any problems to give tax concessions in that front. The same applies here they are not tools that you might mentally conjure but they are necessary professional “tools” incurred in deliverance of services as such tax concessions are given. Which currently we are not receiving such relieves through our PAYE system.
Gross VS Basic (under the progressive tax system)
Ordinarily and for many – people don’t want to or are not forthcoming in paying tax that is why the concept of fairness is crucial in our tax system. A fair tax system will reduce levels of tax evasion and/or avoidance. When people deem the tax system as unfair and on good grounds activities are undertaken which are counterproductive to tax collection leading to loss of tax revenue for the country.
Gambia operates a progressive income tax system meaning the more income you earn the more tax you pay. This concept is fine and would appeal to many on the back of fairness. On the face of it, the provisions of the employment income tax law, those subjected to PAYE (Pay as you Earn) states all employees pay tax on their gross (in essence basic pay plus allowances) however in practice this provision only appears to be applied on the private sector economy. And the Civil servants including parastatals are only paying tax on basic (excluding allowances) which is contrary to the provision captured above. This I understand to have been a moratorium granted by the former president for civil servants and parastatals [This includes GRA staff paying tax only on their basic] whilst the rest of us in the private sector pays tax on their gross income.
To further demonstrate let’s take my Mum and Dad they have similar pay. My Dad works in the private sector and my mum a civil servant. My Dad pays tax on all his income and my mum only on her basic income. Meaning my Dad pays near double in income tax than my mum despite having similar pay. This scenario is not just between my parents but it is to demonstrate a system wide issue for this country and it needs to be reviewed and changed as soon as possible. The idea that the private sector has bigger incomes and/or allowances so tax them gross and we reserve our civil servants and parastatals tax to basic is flawed and simply unfair/broken. It takes an educated unbiased mind who has the basic appreciation of tax principles to see that this is wrong and harms initiative. The possible revenue collection that’s being forgone by this country’s tax practice is much needed revenue for this country’s development agenda.
In my view if Gambia does decide to keep taxing gross incomes this should be done across the board regardless whether one is in the civil service or not and tax relieves also given were this is applicable (across the board). The country should encourage enterprise and the private sector of any country in the civilised world are the engines of their economy. I would further suggest the review of tax brackets if there are concerns over people’s residual income after tax (take-home-pay) to accommodate for the suggested changes above.
Imbalances on income tax contributions
In this country people under PAYE (you and me) are bearing the brunt of tax and other industries most prominently the construction industry worth billions of Dalasis you would find contractors not paying a butut in income tax due. This extends to other less formal sectors of the economy. This ties in with my other point on fairness more needs to be done to capture incomes in these sectors and ensure they pay the right amount of tax to contribute to the socio-economic development of this country.
The unpopular view
My most unpopular view is why the president of this country is not paying income tax? If you ask any tax man worth his name why people should pay tax: They would reply among others revenue collected would be spent on things like defence, health, infrastructure, city councils or welfare. That being said why is the president of this country then not contributing to this great initiative. Needles I say this is not a party politic issue as I understand this to have been the case from his predecessor. This matter in question has to do with national development and how we contribute to this end.
If the leader of this country were to pay tax under the progressive tax system. The resultant tax due base on estimates will be equivalent to a ministers salary or equivalent. That will be a savings for this small country of 2 million people and given the imbalances as is, in the tax system this is much needed revenue for this country. Gambia does not have a monarchy system and as a leader of this country I would like to suggest this be a serious consideration in terms of impact it will have in this country and the leadership it will show for our beloved country if the president were to lead the way in paying income taxes.
This country has multiple challenges in today’s world and much of it wouldn’t be solved overnight but we can impact change in our systems to secure a bright future for generations to come after us.