Professionals, MPs urge Govt. to revise PAYE rates
The increase in PAYE (tax) rates imposed on large, take-home pay earners is to be revised on the directions of the President as pressure is mounting against the government from private sector professionals and parliamentarians.
A large portion of professionals’ take-home pay is being taxed at 24 per cent from April, up from 16 per cent earlier prompting them to find greener pastures in foreign countries, a recent CEO’s forum in Colombo revealed.
President Maithripala Sirisena this week told a gathering of newly appointed graduate teachers participating in a ceremony at the Nelum Pokuna in Colombo that the emigration of professionals and intellectuals in various fields was a major problem for the development of the country.
A large number of parliamentarians have also expressed their concern on the increased taxes on their all-inclusive salary.
According to parliamentary data, the basic salary of a parliamentarian is in the region of Rs.54,250, but their all-inclusive salary package exceeds Rs. 270,000 inclusive of fuel allowance of Rs.15,000 to 65,000, Rs. 100,000 allowance for personnel staff, Rs.50,000 for telephone bill, transport allowance for staff Rs.10,000 and entertainment allowance of Rs.1000.
In addition an MP gets Rs.2500 for each parliamentary session, Rs. 100,000 to maintain an office and stamp allowance of Rs.14,500.
Under the new tax scheme, each MP has to pay more than Rs.60,000 per month as PAYE which is high under the present cost of living environment, several government and opposition MPS told the Business Times adding that they are taxed at a maximum 24 per cent.
An opposition MP told the Business Times this tax cut has made it impossible to carry out work in the village and are compelled to spend out of their own pockets.
Another MP said that it’s unfair to impose PAYE on the all-inclusive salary (instead of the basic wage) as some of them receive these allowances to carry out work in their electorates.
An appeal by professionals calling on the government to withdraw the 2018 budget proposal of increasing PAYE by 8 per cent has already been made in a letter to the president, several top officials serving in leading private firms in the country told the Business Times.
They warned that the country’s public sector will collapse as a result of the impending dearth of professionals heading the business entities due to migration of top management personnel for overseas jobs to countries like New Zealand, Australia, West Asia and the African region.
Inland Revenue Service Union Joint Secretary H.A.L. Udayasiri, told the Business Times that although PAYE will increase for individuals with high incomes (monthly income of more than Rs. 300,000), the number of taxpayers with such high incomes is low, he said adding that it won’t bring much revenue.
One reason for the decrease in tax revenue was the higher threshold at which individuals are taxed, he claimed.
Less people pay taxes due to the higher threshold and the new tax regime has also removed concessions given in the earlier tax regime which provided a lower tax rate for professionals, he disclosed.