A move has been made by government to remove taxes from pensions and as it was tabled in the Upper House recently, it was highly supported by Senators.
With the passing of the bill, tax relief will be provided on all approved taxes; whether pension is being received in a lump-sum payment or whether it is a monthly payment, it will be exempted from income taxes.
It will be backdated as it takes effect from January 1st 2017.
The Income Tax Amendment Bill was presented by Leader of Government Business, Senator Simon Stiell at the Trade Centre last Thursday.
He praised the ruling New National Party (NNP) government on taking the initiative while throwing the opposition, National Democratic Congress (NDC) under the bus.
Sen. Stiell stated that the very same was requested by TUC of the 2008-13 NDC administration but it was not adhered to.
“As a background to this and to demonstrate some of the sentiments of this government, when we came into office in 2013, one of the first pieces of legislation to come to parliament was the removal of income tax on severance payments.
“The removal of income tax on severance payments is a clear demonstration of this administration’s concerns and sensitivity of the labour movement, especially at that testing time.
“This administration removed income tax on NIS pension…again something that the labour movement had called for under the previous administration but again fell on deaf ears.
Leader of the Opposition, Senator Nazim Burke quickly came to the defense of Congress stating that it was the first party to start the process of removing taxes from pensions.
“While it is true that the National Democratic Congress (NDC) did not put in place a complete removal of taxes on all severance, the fact is, it was the first government to act in that regard. Let’s not forget that taxes, pensions and these lump-sum payments whether we call them gratuity or some other form of severance pay, they were taxable up until 2010”, he said.
“They were taxable under the income tax legislation and they were taxed by previous governments including the New National Party Administration between 1995 and 2008. They were taxed so do not come pretending that you are the good guy and NDC is the bad guy and everything that you did was good and everything that (we) did was bad…it is silly because the fact is it existed, it was in law and you were sucking the taxes out of it,” he added.
In spite of this, Sen. Burke gave his support to the bill and commended the government for taking that step.
“We believe it’s the right thing to do and if the government takes the step as we have said before, any credible opposition party must have the courage to commend a government when it does something that is right. If we believe that any step taken by the government is in the best interest of the nation, no matter what differences, we must have the courage to say it was the right thing to do”, he told Parliament.
“…We believe that those who have worked in this country for 25, 30, 40 years, who have contributed, on whose backs this nation was built, having worked in some cases for 40 years in the same job, having reached the age where they are more vulnerable health-wise and their needs and demands for medical services increase and their expenses for health care would be greatest and not having a source of income other than the pensionable income, in many cases that’s all they have…many of them would have managed to finish pay for their houses, some may not and the decision to say we will not tax it is a good step,” he said.
Also giving support to the bill was Labour representative in the Senate, Ray Roberts.
However, he admonished government to continue on the path as its work is not yet done.
“You are right when you say to those of us who have worked with the state, worked with the private sector, have earned the right to earn a pension, deserve that little incentive from the state which is not to put any tax on our gratuity and our pension.
“So without any doubt the TUC and I’m sure all workers retired and workers to be, are justly proud to be a recipient of that – I would say gift from your government; however, I want to remind you that your work is incomplete.
“There are in excess of 500 teachers and public officers who have retired and have not been paid pension as stipulated in (the) 1958 pension act and also stipulated in our constitution.
Sen. Roberts stressed that in the coming years there are many more persons who will be retiring and would be in need of a pension.
“So we hope that this is the start of many more things that you will accomplish… between 1995 and now, you have had 4 and a half years of not being in power…so certainly you had time to do a lot more. Those who are home and are not receiving a pension, they would be hurt that that has not been treated with…you are a long way from completing what the people of Grenada deserve.
“…By 2020/2023 most of the people who started in 1983 will be either 60 or very close to 60 and that would add in excess of another 500 plus that you have home who are not receiving a pension, who have made 38 years and unlike the privilege few (who) have given themselves a pension and they too will enjoy it.
Tax exemption – you’re not doing it for workers only, you are doing it for yourselves but I hope that this bill will not exempt your gratuity (where) after four years, you collect a year’s salary…so really and truly I hope you’re just not protecting yourselves, we are protecting all the workers of Grenada Carriacou and Petite Martinique.
Sen. Roberts’ reference to the “privileged few who have given themselves a pension” is clearly directed at Members of Parliament who receive a State pension after serving only two terms in Parliament.