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“Tax burden mainly on professionals”

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The People’s Movement for Fair Taxation has called on the government to protect the EPF and to reduce the tax burden that working professionals face. They have argued that loan allowances should be made so that post-tax income remains at healthy levels. They argue that the tax burden has been disproportionately felt by their members.

They noted that there would be mass migration from their members if the government didn’t act swiftly to rectify the situation. They note that most of their members are highly skilled and disproportionately contribute to the productive output of the country.

Media Co-Ordinator Chathurika Prabodani (pictured) said, “We are the category that is paying the highest amount of PAYE tax and indirect taxes.” Prabodani notes that the tax threshold structure captures a much larger portion of their member’s incomes than it does the elite.

With the advent of the likes of BOI agreements, the elite pay a lower effective rate of tax than working professionals. Furthermore, without the ability to set off losses in the computation of taxes workers may be losing money while working.

Prabodani explained a worker who undertakes a loan for the purchase of a property would face both the burden of taxes before the servicing of the loan and can’t set off the losses attributable to the dip in the housing market.

This, however, has been a strategy employed by many listed corporates for the reduction of their tax liability as represented in the recent interim statements.

As a stop-gap measure for the current crisis, Prabodani called for the direct payment of EPF contributions to the employees. She noted that given the attitude reflected by the tax administrators, she had little trust that the debt restructuring would protect working professionals and their large savings accumulating nominal (not real) returns in the Employees Provident Fund.

Prabodani called for flexibility for Private Pension Funds and equal tax treatment. She noted that a pension fund in the IT sector would be a great way of collecting capital that would be well-targeted for the development of the IT sector.

Prabodani said, “The majority of our people are between 30-36% in taxation.”

She complained that over one-third of their income would have to be written off as taxes. On top of this, the services provided through these taxes were not actively utilized by the majority of their members.

Prabodani noted that if an index was compiled for the likely expenditures and income sources of the working professionals against the elite there would be a reflection of how unjust the tax system has become. She noted that the large inflation brought about by the shock depreciation of the currency was also a disproportionate tax on working professionals. (TP)

Tuesday, February 7, 2023 – 01:00

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