Industrial relations consultant Henderson Bass has advised the Ministry of Finance and the Economy to take a cautious approach in implementing measures to close existing loopholes in the administration of Personal Income Tax (PIT).
Bass noted that the legislation and regulations are framed to bring all perks, allowances, and other fringe benefits into the tax net.
He suggested, however, that a “broad-brush”, all-inclusive policy of taxing even the smallest benefits might have a negative overall effect on an already seriously challenged economy.
Bass made the remarks on Monday, during an appearance on the Colin Sampson Show. (Listen to the full conversation by visiting the Caribarena.com video archive.)
The long-serving former executive secretary to the Antigua & Barbuda Employers Federation also advised security providers to jointly take the festering issue of shift hours to the Ministry of Labour for resolution.
He said the minister, using powers granted him under Division C of the Antigua & Barbuda Labour Code, can issue an order varying certain provisions of the Labour Code, under specific conditions, for some industries or economic sectors.
While affirming his distaste for such tax dodges as inflating allowances at the expense of salaries, or having salaries paid overseas to escape the local tax net, Bass warned that taxing the relatively minor allowances afforded to low-level workers would have adverse effects on the economy.
The move would increase administrative costs to management, he said, while leaving workers disgruntled about their take-home pay reduced. The net result of this, the industrial relations consultant said, would most likely be an overall reduction in productivity accompanied by a deterioration of relations in the workplace.
In this connection, Bass observed that labour unions have already begun to speak out about seeking increased compensation in other areas to replace income lost to their membership through taxation.
Referring to the issue of shift hours in the security industry, Bass acknowledged that security workers in general seem to be at ease with the “illegal” longer shift hours, seeing them as an essential means of enlarging their pay packets. He noted that considerations of efficiency in supplying services to clients who have varying needs will militate in favour of unorthodox shift arrangements.
Bass urged labour unions interested in representing security workers to back away from their fixed concentration of the letter of the Labour Code and seek more flexible and creative means of improving the lot of security workers.
The consultant, who normally represents the management side in industrial matters, regretted the manner in which the minimum wage is structured. He suggested that the single tier one-size-fits-all minimum wage has the effect of undervaluing security work. Bass also chastised managers who accept low rates from security providers when their knowledge and experience should tell them that the figures quoted cannot be realistic.
Reverting to the matter of taxing benefits and allowances, Bass noted that consultations are still in progress, and no hard-and-fast decisions have yet been made. Hinting that he has seen a list that “seems to include everything,” the industrial relations consultant expressed his hope that the stakeholders’ contributions will be taken on board when final lines are drawn.
(Source http://www.caribarena.com/antigua/news/economy/99428-bass-urges-caution-in-changing-tax-system.html)
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