According to a statement released by the Internal Revenue Commission (IRC) yesterday afternoon, there has been no tax increase by the current government.
The IRC Commissioner General, Sam Koim stated that as part of the Covid tax relief measures, the government initially raised the tax-free threshold from K12,500 to K17,500, and subsequently further increased it to K20,000, resulting in improved pays even for those earning above K20,000.
“The law establishing the K20,000 threshold increase was set to expire on 31 December 2023.” he said.
“During the recent Budget session, the government made the K20,000 threshold permanent. It is
important to note that all the aforementioned tax reliefs were originally intended to be temporary.” he stated.
Koim further stated that the Alesco system was programmed to align with the expiration date of the legislation.
“However, the Alesco system was not reconfigured on time when the 20k threshold law was made
permanent, resulting in the salary threshold not being adjusted accordingly. Consequently, Pay 1
was impacted, which appeared as a pay cut because people had become accustomed to the new
take-home pay. ”
He said the Finance Department is in the process of rectifying this, and the adjustments will be reflected in Pay 2.
“The losses of Pay 1 will be fully reimbursed.” he said.
In addition, he expressed that the dependency rebates eliminated by Parliament last year had not been effected yet, so claims that the pay cut is due to the removal of dependency rebates are unfounded.
“The statement issued by a director of Department of Personal Management are also unfounded which Secretary Sansan has now clarified.” he said.
