Dear Sir, With the current PAYE and NSSF deductions on my Salary, I am left with very little disposable income to save for an Education policy, Are there any incentives in place to help subsidize these deductions?
Pay As You Earn (PAYE) is a statutory tax deducted by employers and remitted to URA monthly in respect to an employee’s monthly earnings. This is commendable and in line with the income tax law. Anybody that earns above Shs235,000 is eligible to contribute PAYE. Whilst NSSF is also a statutory deduction, it is actually your own retirement savings.
Depending on one’s income bracket, most people earning more than Shs410,000 might find themselves paying close to 30 per cent of their income in PAYE, add another 5 per cent NSSF and definitely their disposable income reduces significantly notwithstanding the deductions for loans and salary advances as this group is the prime target for credit.
Sadly there are no tax incentives yet but perhaps we could borrow a leaf from the Mauritius Revenue Authority which offers incentives for employees with children, employees with non-working spouses, disabled employees etc.
Many tax contributing employees today pay their children’s school fees, have a medical insurance policy from their employer and are usually saving for a pension. This means they might not be a tax burden to the state in terms of Education or Healthcare or even retirement. If URA declared a PAYE tax incentive for such employees who say save for retirement or Education, it would not only increase the number of new savers but subsequently reduce the future tax burden of the state yet making paying tax a rewarding activity. A certain attraction for those in the informal sector as well.
For more information please contact, firstname.lastname@example.org, The writer is the Corporate Sales Manager for UAP Life Insurance.