Zimbabwe Revenue Authority to continue taxing teachers' incentives

THE state media on Monday reported that the Zimbabwe Revenue Authority says it will continue taxing teachers' incentives because educators are part of the "mainstream" workers who earn income that should be taxed.

Teacher incentives, Zimra said, were taxed in terms of Section 8 of the Income Act (Chapter 23:06) and the tax applicable was Pay As You Earn.

The incentives are considered as double pay and should be declared for taxation.

Zimra legal and corporate services director Ms Florence Jambwa last Friday said people who earn more should contribute higher taxes than low-income earners.
She said Zimra had been "lenient" on teachers' incentives for too long.

This comes amid reports that Finance Minister Tendai Biti had directed his permanent secretary Mr Willard Manungo to write to Zimra ordering them to stop the deductions. Sources said Minister Biti feared the move by Zimra would result in an "unnecessary labour unrest".

"Employment income is broadly defined to include all forms of compensation or rewards to employees and this includes incentives, whether employees are teachers or otherwise," Ms Jambwa said.

"The basis of taxing employment income is in accordance with rules and tax thresholds which start at zero and increase with the level of income in the spirit that those who earn more should contribute higher taxes than those who are low income earners.
"The bottom line is that the payment of rewards is in appreciation of services rendered or to be rendered. It does not matter who pays or from where the payment is made from."

Government sources have also indicated that only incentives from the Public Service Commission are tax-free.

Ms Jambwa said school development associations were responsible for deducting and remitting employees' tax on incentives to Zimra within prescribed time limits.

She said failure to withhold or remit tax renders the employer "personally" liable for the taxes due and subsequent penalties and interest thereon.

"Paragraph 3 of the 13th schedule of the Income Tax Act stipulates that every employer who pays or becomes liable to pay any amount by way of remuneration to an employee shall- unless the Commissioner has granted authority to the contrary-withhold from that amount by way of employees' tax an amount which shall be determined in accordance with tax tables," she said.

"The amount withheld shall be paid to the Commissioner on the 10th day of the month following the withholding. This effectively covers School Development Associations in the sense that they pay incentives to teachers in appreciation of services they render."
Commenting on Zimra officials descending on several schools countrywide, Ms Jambwa said their conduct was governed by the "employment code of conduct", which provides parameters of how they should discharge their duties.
Mr Manungo yesterday said Government would take up the matter with both parties to find a "win-win situation."

"We do not want to create panic in the education sector hence the need to move in quickly," he said.

"The issue is full of challenges because the technicality is on who has the onus to gross up the income. Zimra has got its argument, the same applies to the Salary Services Bureau, schools and parents," he said.

Incentives have been a controversial matter and several meetings have been held to determine whether to abolish them or not.

Two weeks ago, chaos marred a meeting between teachers' unions and Government representatives to discuss the incentives being paid by parents.

The parties later agreed that Government should introduce an education allowance that will standardise incentives if it fails to award salary increases above the Poverty Datum Line.