• Friday, December 08, 2023
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Benefits of personal income tax to Bayelsans


From: As Bayelsa State begins implementation of the Personal Income Tax Act (PITA) as amended, there are positive indications that it would engender growth and development across all sectors in the state economy in spite of anger and apprehension being expressed by a section of civil servants in the state.

The Special Adviser to Governor Seriake Dickson on Treasury, Account and Revenue, Timipre Seipulo has explained that the state government has taken a number of steps to allay fears and concerns being expressed by civil servants and even privately employed persons, saying that the state was not interested in taking a kobo more from any civil servant in the implementation of the new tax regime.

Seipulo said that apart from improving the internally generated revenue (IGR) profile of the state, the state government would ensure that funds realised from the new tax regime would be domiciled in a separate bank account and the details would be made known to the state during the monthly transparency briefing by Governor Dickson.

He stated further that as the state was embarking on massive infrastructural projects, the funds would also be channeled towards projects but stressed that the people of the state would be appropriately and timely informed of any movement in the tax account in line with the policy of accountability and transparency by the Dickson administration.

The silent resistance to the implementation of the act is coming from civil servants who earn higher salaries, particularly among health workers and top civil servants who have questioned huge deductions from their basic monthly salaries and allowances.

But BusinessDay reliably gathered that the resistance could be due to a lack of understanding of the Personal Income Tax Act (PITA) which was amended in June 2011 and came into effect in January 2012 by the affected workers who believe that the state government arbitrarily fixed the new tax rates as well as the taxable income.

Seipulo offered opportunity to all those seeking further clarifications on their deductions to make their own calculations and approach the appropriate agency in line with the provisions of the amended tax act saying “the issue should be what the law says in respect to personal income tax and not the consequences.”

He stated further that personal income tax law has been in existence in Nigeria for a long time and when a law was established, what the government expects was the implementation of the law disclosing that people in the private sector have been paying personal income tax according to the law.

Giving a brief background on the tax issue in the state, he said the state government had set up a revenue committee which visited a number of states including Lagos, Rivers and Edo to study the implementation of PITA in those states before its implementation was announced by Governor Dickson.

Seipulo pointed out that one of the challenges was that in Bayelsa State, the right thing was not done from the onset based on the law and that workers were not taxed according to existing laws in the country stressing that the tax laws were made by the Federal Government but in the case of personal income tax, the state was the beneficiary.

According to him, by the provision of PITA, the first N300,000 income is taxed at 7.0 percent, the next N300,000 at 11 percent, next N500,000 at 15 percent; next N500,000 at 19 percent, next N1.6 million at 21 percent and above N3.2 million attracted 24 percent tax and 1.0 percent tax was deducted in case of no taxable allowance.

He pointed out that contrary to what was held in some quarters, every allowance that constituted gain to a worker was also taxable as provided for in the Sixth Schedule of the tax act and that the incomes exempt from taxation were National Housing Fund Contribution, National Health Insurance Scheme, Life Assurance Premium, National Pension Scheme and gratuities.

In his words: “Both basic salary and all allowances ate subject to tax except the above. Any other allowances, salary, wage or fee from gain is taxable” and urged those who were against the implementation of the new tax regime to show understanding as the government was ready to answer their questions by making the necessary clarifications.

Seipulo also took time to explain that the state government was looking at how to plug loopholes in the implementation of the new tax regime to ensure that tax revenue came into the state and not individual pockets while assuring that the issue of multiplication of taxes was being tackled and that tax collection would be done in an honorable way to show tax payers the respect they deserved.

On refusal by some individuals to pay tax, he revealed that the government would go to court to disable such premises just as the relationship with tax consultants was being reviewed due to discrepancies between previous tax assessments and recent ones while no reasons were given for both upward and downward reviews of some tax assessments.