The editor, Sir:
A Financial Gleaner article dated June 22, 2007 headed "Merger of Payroll taxes faces legal hurdles" reported on the JEF's monthly CEO breakfast held on June 20, 2007, where Dr. Omar Davies spoke on 'The Proposed Consolidation of Statutory deductions'.
The article stated: "Davies also said on Wednesday that the definition of 'earnings' could be problematic".
The definition of earnings in the NIS, NHT, and Education tax legislation states: "the statutory income computed pursuant to the Income Tax Act."
Problematic definition of earnings
This definition of earnings for the payroll tax laws is not only problematic but wrong, because by defining earnings to be the statutory income computed pursuant to the Income Tax Act, it includes all types of income such as wages, salaries, self-employed profit, pensions, dividends, interest from savings accounts, certificates of deposit, treasury bills, bonds, loans, trust income, annuities, alimony, royalties, rent, and many other income that is subject to income tax, some of which has nothing to do with a payroll.
The definition of earnings should be restricted to wages, salaries and self-employed profits as in the Income Tax Act.
In the years 2000 and 2001, contributions were sought from investment income in different ways. When objections to these enforcements were made, two waivers appeared.
The first waiver emerged as reported speech, and not an official legal document, as it appeared in the Business Observer page 3B on Wednesday February 14, 2001 with the headline stating: 'investment income liable to the NHT but agency will not go after tax'.
Second Waiver
The second waiver appeared on the Education Tax Self Employed annual return form, ETOI, issued September 2001. It states on the front page:
"Earnings mean the statutory income for income tax less any income earned from interest and dividends."
It states on the back of the page: "Assessable earnings do NOT include dividends, interest, and pensions."
It should be noted that the NHT's waiver says investment income is liable, but the Education Tax's waiver says it is NOT liable, even though both laws have the same definition of earnings.
With these two waivers, investors can now create wealth for their retirement and for the country.
I am, etc.,
Geoffery R. Hanna
