Tax breaks come into effect

THE long-awaited income tax relief measures in the 2009-10 Budget become effective today and will be backdated to March 1.
It means that the majority of salary earners in Namibia won’t just be paying less tax in future, but can also expect a refund from the Receiver of Revenue soon.

Unfortunately this doesn’t mean bulging pockets for low-income workers, who only stand to gain about N$58 more every month.Top earners, similarly, have no reason to smile.As from today, they will be boosting Government coffers by a new super tax of 37 per cent.Those benefiting the most from Finance Minister Saara Kuugongelwa-Amadhila’s tax relief have to earn between N$500 000 and N$800 000 a year.When she tabled her budget in March, the Minister announced five new income-tax brackets and lower income-tax rates, which economists believe will boost consumer spending power by about N$60 million a year.According to the Minister’s budget speech, annual salaries up to N$40 000 are now exempted from tax, compared to N$36 000 previously. Annual salaries between N$40 001 and N$80 000 will be taxed at 27 per cent. The tax rate for incomes of between N$80 001 and N$200 000 per year is 32 per cent, while the rate for the category of N$200 001 to N$750 000 is 34 per cent.Anything above N$750 000 will be taxed at 37 per cent.The new income tax tables will be published in the Government Gazette today.Workers earning N$36 000 a year, who had to pay income tax up to now, will no longer have to do so. Besides saving the tax of about N$58 every month, the Receiver owes each of them nearly N$348 for paying too much tax from March to August.Somebody with a taxable income of N$60 000 will pay N$5 400 income tax this year, N$1 200 less than last year. In practice, this person should be paying N$100 less income tax from the end of September. Such an employee should also receive a refund of N$600 for the six months that the taxman was paid N$100 per month too much.Those earning N$150 000 per year will owe the Receiver N$33 200 this year. This is N$3 450 less than in 2008 and means that the taxpayer will have N$287,50 extra to spend every month. A refund of about N$1 725 should also be on its way.Tax of N$151 200 will be deductible on an annual salary of N$500 000 as opposed to N$158 900 last year. The taxpayer will therefore save N$642 on income tax every month, and should get N$3 852 back for the past six months. On a yearly salary of N$1 million, the Receiver will this year be entitled to N$328 700 – N$5 200 less than last year. This will increase the spending power of people in this group by N$433 a month, while the one-off refund amounts to N$2 598.Those earning N$2 million a year or more will be hit by Minister Kuugongelwa-Amadhila’s new super tax of 37 per cent from today. They will now pay income tax of N$698 700 – N$14 800 a year or N$1 233 a month more than last year. They also owe the Receiver N$7 398 in backdated income tax from March to August.Finance Permanent Secretary Calle Schlettwein confirmed yesterday that the new brackets and rates are retroactive and that they become effective once published in the Gazette.However, he said the other tax changes announced by the Minister in her budget speech first have to go through Parliament and will only become valid once the appropriate law is amended.This includes Kuugongelwa-Amadhila’s budget promise that value-added tax (VAT) will no longer be charged on milk and sugar. This, and other tax amendments, is likely to be addressed when the National Assembly resumes it session today.jo-mare@namibian.com.na