Deputy Prime Minister and Treasurer Charles Abel says: “They keep the cash out of the system, not using bank accounts, don’t have tax file numbers and all of that.”
The Government will now be introducing the “tax administration law”, where commercial banks will be giving the government information on all bank accounts that are operating like businesses.
“We have a range of measures that will bolster the system.
“We continue to give money to the Internal Revenue Commission (IRC) and customs and the IRC is receiving an additional K19 million in the 2018 budget, which we are expecting them to collect additional revenue for us.”
On salary tax, he says: “I hear people say we pay 40 percent in tax; that is incorrect. Tax is paid on salaries in a scaled manner. All the income that you receive on your salary up to K10,000 is tax free.”
Abel revealed that the government wanted to increase that a bit further in the 2018 budget but the current economic situation did not allow it.
“But the government wants to give some tax relief that will happen in the future.”
Abel said the government had increased the tax threshold from K6,000 to K10,000 in the last five years.
“So for example the next K10,000 you might get 20 percent, the next K5,000 goes up to 30 percent, the top marginal tax bracket for people who are receiving more than K200,000 it’s 42 percent,” explains the DPM.
“So if you are getting K201,000, that one kina is being taxed at 42 percent. Everything below is being taxed at a lower rate, right down to K10,000, which is about K460 per fortnight.
“You will not pay any tax, so people must stop saying you are paying 41 percent. You are not paying 41 percent unless you are being paid above K200,000, where you’ll be taxed at 42 percent.”
Abel says most public servants are probably paying an average of 25 to 30 percent income tax while a lot of small wage earners are not paying any tax.
(Deputy Prime Minister and Treasurer Charles Abel)