Georgetown : The Income Tax (Amendment) Bill 2016 was passed in the National Assembly late last evening. 16 sections of the Income Tax Act, Chapter 81:01 were amended and one repealed.
Minister of Finance Winston Jordan, placing the Bill before the House for consideration, outlined that the “major reforms” seek to strengthen the arm of the Guyana Revenue Authority (GRA) in a number of areas while benefiting individuals.
The “radical reform” of the Income Tax Act is part of the government’s efforts to address the complaints that were raised by sections of society.
"Complaints had been made that people thought that the tax system was unfair, rates were too high resulting in a lot of requests for allowances, exemptions, it attacked work ethic, it did not reward effort,” Minister Jordan outlined.
The amendments to sections 8, 20, 36, and 60 seek to deal with the increase in the threshold and the reduction in the income tax rate. Initially, the income tax threshold was introduced to simplify the tax system for individuals.
However, “this progressive approach” was removed by the previous administration in 1993, Minister Jordan pointed out. The minister added that the existing flat threshold and tax proved regressive with the need to constantly increase the threshold so that persons could get some relief.
Noting that salaried employees have borne the tax burden under this system, Minister Jordan pointed out that these new measures reduce the need for constant increases in the income threshold and put more money in people’s pockets.
“In this budget, we decided enough is enough, so we proposed the increase in the threshold from its present $55, 000 per month or 1/3 of your gross whichever is higher. So, there is no longer any need to come asking for threshold as your salary grows and it grows out of the $60,000 as it passes $720,000 per year, your 1/3 is supposed to start kicking in so you don’t need to come back anymore for any gratuitous changes in this Bill,” Minister Jordan explained.
On the lower end of the earning scale, the threshold has been increased by at least 20 percent Minister Jordan pointed out. “I believe that such a benefit is welcomed by all persons. At the end of the day, people can see their way especially the middle-class people. In one fell swoop this measure would have effectively put $70,000 more in your pocket just like that,” Minister Jordan said.
Meanwhile, the amendment of Section 33E seeks to incorporate a miners’ declaration for income tax outside of the two percent that is currently declared. “There has been some level of misunderstanding by the gold and mining industry that once gold is produced and declared then all income produced from gold and mining are so exempted, in other words, once you would have paid your two percent that’s the be all, end all,” Minister Jordan said.
This has led to discrepancies in the declaration to GRA varying drastically from a miner’s net worth. The amendment will repeal subsections 4 and 5 to address the misunderstanding and bring operators in the mining sector under the purview of the Tax Acts, Minister Jordan explained.
“It is the view of the Revenue Authority that this repeal may very well see many gold miners receiving refunds of a portion of their two percent tax withheld upon filing their true and correct returns,” Minister Jordan pointed out as an advantage to miners.
Other amendments include: Updating the tributors' tax which has remained unchanged since 1988 Extending tax net to capture independent contractors and
· Adjusting mortgage interest relief from $30M to $15M to ensure that the low income housing bracket truly benefits from the measure.
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