Submitted by GoWEB Caribbean – Written by Caswell Franklyn
The Minister of Finance announced in the 2010 Budget that travelling and entertainment allowances would be taxed. That proposal generated much debate about the hardship that would be visited upon certain sections of the Public service.
One major union even informed its members, that it was able to negotiate a concession where the allowances would be added to workers’ salaries for pension purposes. Unfortunately, the benefit of that concession would not be realised by any person who works for less than $4,090 per month.
When the proposal was announced in the House of Assembly, an Opposition member accused the Government of taxing the workers’ allowances but not those of Members of Parliament. It was pointed out that the Ministers and Parliamentary Secretaries (Remuneration and Allowances) Act exempted MP’s from the payment of income tax on those allowances.
In order to make sense of the proposal, I started from the premise that, prior to the budgetary proposal; travelling and entertainment allowances were not taxable since Government was now introducing a “new” tax. If those allowances were previously exempted from the payment of income tax for everyone, in accordance with the 1968 Income Tax Act, why would MP’s pass the Ministers and Parliamentary Secretaries (Remuneration and Allowances) Act, in 1979, to exempt themselves from a tax that did not apply? The answer is simple: those allowances were always taxable, except for travelling done in the performance of duty.
Section 9 of the Income Tax Act exempted allowances: for travelling expenses; or maintaining and operating a vehicle, to the extent that the allowances may reasonably be regarded as representing the cost to the person of travelling in the performance of the duties of an office or employment. Put simply, persons who receive travelling and entertainment allowances as perks should have been paying income tax all along.
It would therefore appear that Government imposed a tax that was already imposed, and it is causing hardship for persons like Court Marshals. They must travel in order to carry out their duties; however, their reimbursement is capped at $553.85 per month and now taxed. This is unreasonable since they use their taxed salaries to travel to facilitate the Government’s work, and when they are reimbursed, it is taxed again.
Government must realise by now that it made a mistake, and take steps to relieve the unnecessary burden that it placed on Court Marshals and other workers who incur expenses to perform their duties.