Leaders’ gratuity for income tax

ALVAR MWAKYUSA in Dodoma

Finance and Planning Minister, Dr Philip Mpango.

Mpango: Immunity waver aims to promote fairness

• President, Vice-President,Premier, MPs included

ALL public leaders in the country, including President John Magufuli, will be subjected to five per cent income tax on their gratuity at the end of their tenure in office.

Previously, the leaders enjoyed exemptions on their send-off packages through the Public Service Retirement Benefits Act of 1999. Finance and Planning Minister Dr Philip Mpango proposed waiving the immunity for lawmakers when presenting budget estimates for 2016/2017 in the National Assembly on June 8.

The proposal was bitterly ‘trashed’ by a section of MPs, with some suggesting that the head of state’s gratuity should also be taxed if the plan was “anything to go by’’.

The ‘bitter ending’ of the ten-day debate was reached on Monday by the minister when winding up the budget estimates. “Gratuity paid to all political leaders, including the president, MPs and ministers must be subjected to a five per cent income tax,” Dr Mpango announced yesterday.

The minister said then that the removal of the exemption was meant to promote equity and fairness in taxation much as majority of MPs opposed the decision. The opposition camp, on the other hand, supported the decision, stressing that it should be scrapped for all leaders.

Dr Mpango said the waiver on exemptions has been extended to all political leaders as it had been suggested by the lawmakers.

“In fact when I proposed the removal of the exemptions on gratuity to President Magufuli, he supported the decision, telling me he will lead by example by having his pension taxed,” Dr Mpango told the House.

He emphasised that leaders ought to live by example, adding that they have to make sacrifices to move the country forward. The exemption was contained in the legislation but it will no longer be the case in the future.”

The minister mentioned political leaders who will have their pensions subjected to five per cent income tax as including the President and the Vice-President of the United Republic of Tanzania, the Prime Minister and the Speaker of the National Assembly.

Others include Deputy Speaker, the Attorney General, Chief Justice, cabinet ministers and their deputies as well as permanent secretaries and Clerk of the National Assembly Since Dr Mpango presented the financial plan for the next fiscal year, many MPs have faulted the removal of the exemption, claiming that they earn meagre income of which they still use to support people in their constituencies.

The MPs, including the Chairperson of the Parliamentary Budget Committee, Ms Hawa Ghasia (Mtwara Rural-CCM), Mr Kangi Lugola (Mwibara-CCM) and Ms Vicky Kamata (Special Seats-CCM), are among lawmakers who spoke against the waiver when debating the financial plan.

They charged that the new arrangement will amount to double taxation against them since they are subjected to the Pay As You Earn (PAYE) income tax deducted from their salaries each month.

Suspended Kigoma Urban MP, Mr Zitto Kabwe (ACT-Wazalendo), posted in his Facebook wall to support the waiver last week, noting, however, that the move has come at the wrong time, bearing in mind that the tenure of the MPs comes to an end in 2020.