By Jomo Paul
[www.inewsguyana.com] – While the APNU+AFC administration has decided to abandon the subsidies being offered to the National Insurance Scheme (NIS) a decision was also taken to make NIS deduction immune to income tax.
Presently, a person’s salary would be subjected to income tax and thereafter, NIS would be deducted, but Finance Minister Winston Jordan says that this should cease.
“Workers will no longer be paying income tax on their national insurance contributions. Thus, in addition to the tax threshold, the Commissioner General must deduct the NIS contributions of the worker before determining his chargeable income,” said Jordan.
According to the Finance Minister, the move will result in a loss of billions to NIS, but it will ensure more monies for workers.
“This will result in a loss of revenue of about $1.3 billion annually but, importantly, it would result in a net increase in the disposable income of all workers,” the Minister told the House during the 2015 Budget presentation.
However, it was noted that this measure will be effective from Year of Assessment 2016. Speaking about the cessation of the subsidy to NIS, Jordan said that it is an opportune time to end the practice.
It was noted that the subsidy was introduced to cushion the effects of the increase in NIS rates in 2003.
The Former People’s Progressive Party/Civic administration had agreed to a temporary cushioning of the impact by paying the equivalent of 1% point of the increase for the workers.
“We believe the time is opportune to end this subsidy, given the substantial increases in salaries at the lower level, complemented by the removal of NIS contributions from being taxed,” said Jordan. This measure will take effect from September 2015.
Dooling out money with nothing coming in is only pointing to one thing and that is Bankruptcy,trying to full fill all the election promises will be sweet now in the first year but when the money don wha gon happen,ask Carl Greenidge.
what about the increase in the income tax threshold
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From: [email protected]
TO: The Editor.
N.I.S. or National Insurance Scheme Subsidies-2015:
If the State provided subsidies are removed, it is obvious that millions will be lost in revenue earned by the state. It also limits the ability of N.I.S. to pay claims to those who are eligible to receive such benefits overtime also.
Currently, both Income taxes and N.I.S. contributions are deducted from an employee’s Gross Income per week or per month. When that employee only pays N.I.S. contributions, and this applies to those who are EMPLOYED.
Then those Voluntary Contributors which are not very large, still cannot provide much revenue to the N.I.S. Revenue Coffers in any significant way.
Unless we have a National Employment surge, where more contributions can be guaranteed.
Derryck S. Griffith.