Tax regime ‘totally unfair’, Minister says

THE tax slapped on pension payouts was unfair and to the disadvantage of pensioners, who paid premiums for their retirement for many years, a Cabinet Minster has said.

“The taxation regime we have here in Namibia is totally unfair, to say the least,” Veterans’ Affairs Minister Ngarikutuke Tjiriange said in Parliament last week. He was contributing to the debate on cash pension payouts being taxed, which was brought to the House by CoD MP Kala Gertze, who requested that Parliament make recommendations to the Executive to lower the tax.”After years of hard work and faithfully contributing to the economic growth of the country, your last benefit, the pension, is heavily taxed although its purpose is to enable a person on retirement to live an acceptably decent life while he or she is no longer able to work for a salary or wage,” the Minister said.He cited the example of Finland, where Government only takes three per cent off a cash pension payout and not 16 per cent, as is done in Namibia.Finland also allows people who contribute to a pension scheme to take out a certain percentage of the benefit during their active years to use for a home loan or to pay for the education of their children.”A member can get a loan with minimum interest of just three per cent, which must be paid back within five years,” Tjiriange pointed out.”This is something we could do to use our (Government) pension fund productively while we are alive, strong and active.”After the Second World War, the Finnish government embarked on the state pension fund and used it to finance infrastructure like electricity supply and the railway system in Finland.”There is no reason why Namibia cannot innovate and use the billions accumulated in the State pension fund to address the challenges we face like education, health, housing, infrastructure and agriculture,” Tjiriange argued.The debate concludes this week.He was contributing to the debate on cash pension payouts being taxed, which was brought to the House by CoD MP Kala Gertze, who requested that Parliament make recommendations to the Executive to lower the tax.”After years of hard work and faithfully contributing to the economic growth of the country, your last benefit, the pension, is heavily taxed although its purpose is to enable a person on retirement to live an acceptably decent life while he or she is no longer able to work for a salary or wage,” the Minister said.He cited the example of Finland, where Government only takes three per cent off a cash pension payout and not 16 per cent, as is done in Namibia.Finland also allows people who contribute to a pension scheme to take out a certain percentage of the benefit during their active years to use for a home loan or to pay for the education of their children.”A member can get a loan with minimum interest of just three per cent, which must be paid back within five years,” Tjiriange pointed out.”This is something we could do to use our (Government) pension fund productively while we are alive, strong and active.”After the Second World War, the Finnish government embarked on the state pension fund and used it to finance infrastructure like electricity supply and the railway system in Finland.”There is no reason why Namibia cannot innovate and use the billions accumulated in the State pension fund to address the challenges we face like education, health, housing, infrastructure and agriculture,” Tjiriange argued.The debate concludes this week.