Posted by Bimbola Oyesola | 11 March 2019 | 1,040 times
The battle for a new national minimum wage in the country seems far from being won. Though Nigerian workers are anxiously waiting for the Senate to pass the bill, there appears to be more hurdles to cross besides the President signing it into law.
While the Organised Labour had fought vehemently to secure N30,000 monthly wage, it is also apprehensive that taxing it further may vitiate the victory won.
In 2011, when the current N18,000 was approved as Minimum Wage, workers in that income bracket were exempted from paying tax as the deduction would have further reduced the wage below N18,000.
Also comparing the contentious N30,000, which is about $83 at current exchange with the 11 dollar per hour minimum wage in America, shows that the least paid worker in America will earn in a day what a Nigerian worker is struggling to earn in a month.
In the same analysis, a worker in Indonesia earns $100 dollar as minimum wage. But unlike in Nigeria, where the social safety net is not working, in Indonesia, the worker salary is not expended on health, education, while, gas, transport are heavily subsidized and food is very cheap and affordable. The opposite is the case here.
Perhaps the reason why Organised Labour is calling for tax exemption on the proposed new wages in order not to put further pressure on it and thereby making the increase irrelevant.
The leadership of the Nigeria Labour Congress (NLC) at its just concluded NLC 12th Quadrennial Delegate Conference raised fresh concerns over the proposed national minimum wage, saying there was need for an amendment of the income tax laws to cushion the effect of devaluation that might hit the N30,000.
In a petition submitted by the National Union of Textile Garment and Tailoring Workers of Nigeria (NUTGTWN) at the plenary session of the conference in Abuja, which saw the re-election of Comrade Ayuba Wabba as President, the union noted that there was a “twin assault on the real income of Nigerian workers caused by unrestrained devaluation of naira and high rate of inflation.
General Secretary, NUTGTWN, Issa Aremu, said that it was important to put pressure on the Federal Inland Revenue Service (FIRS) to raise the tax bar in such a way that N30,000 minimum wage would fall below taxable income.
In the same vein, the labour leader made case for tax holidays for some categories of Nigerian workers.
He said: “Now that we have raised the minimum wage to N30,000, we must impress it on the FIRS to raise tax bar so that the new minimum wage will be protected.
“If you tax minimum wage of N30,000, we may as well go back to N25,000 or N27,000 by default.
Deputy Speaker of the House of Representatives, Yusuf Sulaiman Lasun, raised the point and I think Labour must push the agenda to protect the new minimum wage.
“The N30,000 monthly income is actually a compromised amount from N56,000 earlier proposed, so it must be protected. If the Federal Government can give 10-year tax holiday to companies, why not give the same to workers? Given the collapse of income, today, Nigerian workers deserve tax holidays.”
Aremu, a gubernatorial candidate of the Labour Party in Kwara state said, “workers are not asking for this because we consider our job as charitable, what workers have in their pocket is what will turn the economy around. That is what we will use to purchase goods in the market and pay rent.”
According to him, for economic recovery to gain traction, it is good for workers to have sustainable purchasing power or disposable income that is off the tax hook.”
Arguing in line with Aremu’s position, General Secretary of NLC, Peter Ozo-Eson, also expressed that the income tax law should be amended to protect workers’ purchasing power.
He reasoned that, “given that the N30,000 labour agreed as a compromised minimum wage is so low, ideally, it should not be taxed.
But I believe that the correct way to do it is to amend the income tax law in order to raise the exemption bar if N30,000 will fall within.
“The law should be amended to ensure that the minimum wage level is below the taxable income. Under the present law, if you earn N18,000 a month, your tax is zero. There is a tax table, but with N30,000, under the existing exemption guideline, there will be some little tax because it will be slightly above the exemption tax. What needs to be done is to have an adjustment to the schedule so that the exemption is placed above the minimum wage.”
Consequently, the NLC at the conference has called on the government to exempt the expected new minimum wage from taxation.
•Excerpted from a Daily Sun report
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