Dear Editor,
Please allow me space in your newspaper to add my voice to the call made by GCCI
president Muhamad Jagana for the new Gambian government to review taxes especially
the payroll tax on the Point Newspaper of Tuesday 6 June 2017. Mr Jagana could not
have said it better when he said, “This will make it possible for people to have more
disposable incomes, spend more money on their lives, improve their quality of living and
also help to gel the economy”.
These are very important considerations and I could not agree more with Mr Jagana that
reviewing the payroll tax for a better regime where low income earners are not penalised
for being in a low-income bracket is necessary. I want to talk a bit more about the unfair
nature of the Gambian payroll tax system and I will do this looking at how employment
income is taxed in the Gambia.
According to the PKF Individual Country Tax Guide 2016/17, anybody with a monthly
income of D1,500 will not pay tax but any amount in excess of this will attract tax at
varying levels of 5% to 30%. PKF has stated in its guide that “tax is payable on the gross
employment income of an employee monthly”. However, I will disagree with this statement
and I will give my reason for the disagreement a bit further in this write up.
Mr Jagana just hit the nail on the head and I think the new government should prioritise
this review to ease the burden on low income earners. Living cost is very high in the
Gambia and I have done a guesstimate of this for a small family of 5 living in Busumbala
and the breadwinner working in Brikama.
This is just an assumption that the family lives in their own home, spends a bare
minimum on basic things with school fees, clothing and medical bills excluded.
Bag of rice last 1 month = D1,200, fish money for a month = D1,500 (30 days x D50),
travel cost to and from work for a month = D320 (20 days x D16), electricity = D500.
As can be seen from the above basic things, the total living cost is assumed to be D3,520.
This is far more than the per capita income reported by the World Bank Group in 2014 of
D1,533 per month (($460 a year x D40) / 12 months). From the above analysis, a small
family needs at least D3,500 to survive at the brink of poverty. If the average income is
£1,500 a month as stated by the World Bank, then poverty is the order of the day as
families will not be able to look after themselves.
Coming back to the statement by PKF that tax is applied on gross monthly income, I will
use the recent payslip of the Honourable Minister of Tourism which featured on the
Freedom Newspaper of 5 April 2017 to argue that this is not the case. It is worth noting
that I have not seen any rebuttal from the Accountant General’s department neither from
the minister himself on the validity of this payslip. On that note, I hold that the payslip is
genuine and valid.
On the said payslip, the minister is paid a basic salary of D29,333, Telephone Allowance
of D5,000, House Rent Allowance of D5,000 and Responsibility allowance of D10,000.
This gives a gross salary of D49,333.50 including a rounding of D0.50. The payslip shows
a net salary of D41,567, meaning a tax deduction of D7,766.50. If we are to rely on the
statement of PKF that tax is based on gross pay, then the minister’s salary will be taxed at
30% being income range above D58,000 per year. Therefore, the tax to be deducted from
the minister’s salary should have been D14,800.05 but only D7,766.50 was deducted
hence why I conclude that Gambia’s income tax regime is flawed and open to abuse by
people in authority.
I have tried to establish the tax rate used on the minister’s salary but find myself chasing
my own tail. Tax of D7,766.50 appears to be 26% of basic pay or 16% of gross pay. This is
not in line with the PKF guide and the rate should have been 30% on basic or gross pay.
The government should note that the current income tax regime is flawed and open to
abuse. All it takes is a clever accountant to pay himself and the senior executives lower
basic salaries and increased allowances. This way, they will pay less tax and go home
with pockets full of money. The poor low income earner who is not privileged to have
allowances will be taxed on their meagre earnings. Have you ever wondered why the rich
are getting richer and the poor getting poorer? Well, here is an example.
I am recommending to the Gambian government to raise the Personal Allowance (Tax
Free Allowance) to D3,500 (basic living cost) and apply tax on gross earnings and NOT
basic salaries. I know critics will say that raising Tax Free Allowance will mean less tax
revenue for GRA but this will be more than compensated by the extra tax revenue to be
generated from fat cat directors and high income earners.
Before anyone attacks me, please note that this write up is not aimed at any particular
person and I used the Tourism minister’s payslip because it is available in the public
domain. The new government needs support in highlighting some of these things which I
believe some people in authority who are benefitting from them wont.
I believe the government should constitute a committee to look at all the tax regimes from
personal tax to Capital Gains Tax, Dividend tax, Withholding tax etc. If there are
resourcing constraints at the GRA, I am willing to collaborate with them and provide help
where necessary. For those who may think that I am looking for employment, well I am
not. I have worked for the likes of Lloyds Banking Group, Halifax Bank of Scotland,
Skipton Building Society and currently with the fourth largest consumer retailer in the UK
with an annual turnover of £16bn. I believe we all should support the government in any
little way we can whether or not you are in the country.
As an example, by applying tax on gross income, tax revenue from the Tourism Minister
would be £14,800 per month compared to the D7,800 being deducted. This is extra
D7,000 revenue per month and apply this to all the ministers and fat cat directors, the tax
revenue will be maximised and more disposable income for poor workers.
As mentioned before, this piece is not aimed at anyone but If anyone is offended by it, I
make no apologies.
Thanks for the space and keep up the good work.
Nuha Ceesay
