MANY MIDDLE-income earners can expect their take-home pay to decrease by at least 15.2 per cent, although Government has raised the tax flooring to reduce the amount of tax from the earnings of pay-as-you-earn (PAYE) workers.

In his opening of the Budget Debate in Parliament two weeks ago, Minister of Finance Audley Shaw announced that previously tax-free benefits would soon attract a tax equal to the current income tax rate of 25 per cent. This, he said, would simplify income-tax collection and yield $1.2 billion in revenue for the Government.

But, according to tax specialist Ethlyn Norton-Coke, persons earning a gross income of $1 million per annum can expect to fork out nearly $95,000 more per annum when accommodation allowance begins to attract the income-tax rate of 25 per cent on July 1. Accommodation allowance is currently taxed at 15 per cent.

"Although the minister had said that he wanted to give the PAYE worker a break, he has done nothing but to make the PAYE worker broke," Norton-Coke argues.

expenses could increase

The middle-income earner's tax expenses might increase further when the Government consolidates payroll taxes and removes the wage cap of $500,000 on the National Insurance Scheme contributions, as well as bring other benefits such as uniform and laundry allowances within the income-tax rate.

The increased tax on allowances was the hot topic at a forum put on by the Institute of Chartered Accountants of Jamaica yesterday.

Norton-Coke says the increase in tax on accommodation could particularly affect middle-income workers whose jobs require them to live in houses owned by their employers.

"I understand they intend to ask you to go to the National Land Agency to get a valuation - who are high valuers - and you will pay the tax out of your salary on the basis of the market rate that that house would have rented for," she explains.

Government has not yet settled on how the tax will be applied but Director General of Tax Administration, Viralee Latibeaudere, says discretion will be used when administering the new measures.

She added that the taxpayer will not be requested to pay for the valuation.

gareth.manning@gleanerjm.com

July 1 tax changes

Accommodation allowance move from a 15 to 25 per cent income-tax rate.

Annual gross income of $1 million per annum pays $95,000 more in tax per annum.

Currently, $1 million of annual gross income attracts over $81,499 in taxes; that will increase to $176,124 starting July.

- Norton-Coke