Income tax or ‘missed tax’
DEAR EDITOR,
When one takes time to consider the success of any performance, the pass grade or acceptable level is usually 50 percent. However, in my observations of the level of income tax submitted to our Tax Administration by self-employed citizens over the years, it amazes me that we have not seen any improvement of the same. In addition, if one applies the same analogy as the 50 percent pass rate or pass rate, then we would be very clear that our Tax Administration has massively failed to enforce the income tax policy or .. Could it be that the policy of ‘income tax’ has failed?
Below is a trend of income tax filed by the self-employed for 2010 to 2019.
(Extracts from the Auditor General’s Reports 2010 – 2019)
Given the above, should we view income tax as discriminatory as only employees are paid through a 100 percent compliant payroll system?
To compound this, everyone is subject to its share of Value Added Tax (14 per cent) and National Insurance Contribution (5.6 per cent). As a result, the average worker faces an effective tax rate on annual earnings of 47.6 per cent (28 per cent + 5.6 per cent + 14 per cent) after taking into account the qualifying threshold. And we are aware that the average worker earns less than 180k every month, which may be considered a very ambitious figure by some.
Therefore, it would be reasonable to say that Income Tax has not performed as it should and should be better enforced or restructured to ensure that everyone has good incentives to comply or be removed.
A humble citizen,
J. Yearwood