A thought on P.A.Y.E tax revision

Open Letter to H.E. the President

Dear Mr. President,

I am writing this letter on behalf of the PAYE tax payers who have been suffering under successive Governments with no one to listen to and address their woes.

My complaint is regarding the latest tax scheme that came into effect from 1 April 2018. Although the Finance Minister says that this will bring equality in the collection of tax, I believe that it will continue the same traditions of tax collection that I can remember since I joined the workforce in 1986.

Sir, I understand that the Government needs taxes to function but is it only the salaried working class that need to contribute towards it? I believe not. If you take the case of a doctor, who carries out private practice, does the income he or she earn get taxed? In my visits to private hospitals for my various ailments, I have seen some consultants seeing more than 20 patients per session, this is a minimum of 2000 rupees per patient. One can imagine how much they earn!

In addition to this, they are provided with duty-free car permits once in five years, while some also receive scholarships to study overseas, fully-paid vacations sponsored by pharmaceutical companies, and a pension to tide them over when they retire. They also have the freedom to resort to strike action for various reasons. Amazingly there are also instances where they quite blatantly engage in private practice while being on “strike”.

While we have to purchase our vehicles after paying the full duty to the Government coffers, contribute taxes from our salaries to educate the university students, we have to retire at the age of 55 and pay the government taxes on our EPF, ETF and Gratuity balances as well. That’s all that is left for us to utilise towards our living expenses, including medical expenses. We even have to pay withholding tax on any bank deposits we place with the balance money in hand.

It is a well-known fact that medical doctors who thrive on private practice and the lawyers who mint money do not declare their total income to pay taxes. The latest addition is the bunch of tuition masters who entered the fray to make money. One can imagine their earning potential when you see their advertising hoardings at busy junctions. We do not want to fool ourselves by thinking all these are honest taxpayers.

Another point worth mentioning is tax evasion by small-scale businessmen. 

They adopt various accounting tricks to show losses and evade taxes. Even if they do pay taxes, those will be very measly amounts, just to hoodwink the authorities. I’m sure if you really analyse the matter, the taxes paid by these businessmen for quarter must be much less than what we pay for a month as PAYE tax.

Other countries adopt various methods to bring these unscrupulous elements into the tax net. 

In conclusion I would like to summarise the points mentioned as follows:

It’s a gross injustice to penalise only the PAYE tax payers. The increase the higher bracket from 16% to 24% effective 1 April 2018 is unreasonable.

Tax authorities should actively engage in getting the medical doctors who do private practice, the lawyers and the tuition masters into the tax net and ensure that they are taxed on the entire income that they make.

There should be a system to tax the small-scale businessman who evades taxes.

The Government should respect the PAYE taxpayer who fulfils the tax obligations very faithfully and should not consider them as a source to bridge the Government’s tax deficit by ignoring the tax evaders.

Sir, if you think that taxing a certain part of the population for the benefit of others is fair, then we have no hope in this beautiful country we are living in. 

However, if not, please take some measures to provide relief to salaried members of the population by revising the taxes and taxing the hitherto untaxed section of the population.

I am writing with a lot of hope that it will receive your favourable consideration. 

Yours faithfully, 

GW