Pay back the money – unions on tax refunds

Trade unions say employers must pay back the tax refunds owed to employees come October when the planned tax repayment/refunds kick in.

The finance and public enterprises ministry announced an amendment to the Income Tax Act that was effective 1 March, however, it was only gazetted this week. This amendment will see taxpayers receiving refunds in October.

In the past tax year, employers deducted Pay As You Earn (PAYE) from employees’ salaries based on old tax rates. After the new tax rates were introduced, some employees may have been overtaxed.

Former unionist Primus Joseph says employers must refund their employees and if the employers fail to pay, the employees must take them to the labour commissioner.

“They (employer) must comply, because there is no excuse for the law. If they don’t comply, they should be taken to the labour commission so that the arbitrator can make a ruling,” Joseph says.

Labour expert Herbert Jauch says in cases where employers do not provide a refund, the employees, supported by their unions, should approach the employer to resolve the matter.

He says if no solution is found, workers can open a case with the labour commissioner.

“The problem with these procedures is that they are far too lengthy. Unions should, therefore, meet employers to explain that they have a legal obligation to refund the employees when too much PAYE was deducted. It is unfortunate that this situation was created by the ministry. It might be an uphill battle for many workers to get their refund,” Jauch says.

NO EFFECT ON EMPLOYERS

Finance minister Iipumbi Shiimi says there will be no negative effects on businesses’ cash flow as a result of paying tax refunds.

Speaking during the National Assembly yesterday, Shiimi said these refunds should not have any negative effects as the refunds will be coming from what was supposed to be paid to the Namibia Revenue Agency (Namra).

“I would like to dispel the misconception that the directive for employers to refund PAYE could force businesses to close down. The ministry is requesting employers to deduct the PAYE reimbursements from employees’ tax to be paid to Namra. As such, on a net basis, there is no cash flow implications for employers,” said Shiimi.

“We take note that there could be instances where employers do not have sufficient tax payable liabilities to effect the full PAYE reimbursements to all employees in a single month. As such, we did not prescribe a time period within which employers should process the refunds,” said Shiimi.

GOVERNMENT MUST PAY FIRST

National Union of Namibian Workers secretary general Job Muniaro says his union will not hold employers accountable to refund the workers, because the employers have already paid the money to the government.

“The government has the money. They should be able to give it back to the employers. Some companies have gone bankrupt because of high taxes, and the money is now with the government. Workers are unemployed, because the companies have gone bankrupt due to high taxes,” Muniaro says.

He says some companies pay 56% of their income to the government in taxes, even though they have over 500 employees.