admintrivial as they are, form taxable income and that therefore they are liable for presumptive tax to be deducted from their salaries.
Minister of Education, Sport, Arts and Culture David Coltart, who is outside his public life, a lawyer, believes that this is an incorrect reading of the Public Service and taxation regulations, meaning that there is room for argument and debate on the matter.
More worryingly, it appears that the decision to assume teachers incentives fall within the definition of a particular type of taxable income that allows presumptive taxes to be levied as a payroll tax, was taken without any consultation with the education ministry or the teachers unions.
It seems to us there are two legal points to be settled: first are the incentives taxable income, and only then can legal opinion be sought as to whether they are the sort of contract taxable income that can be taxed through deductions on salaries.
There seems to be room to doubt even the first point, at least on the grounds of equity.
The incentives come from parents, and therefore have already been taxed when the parents’ incomes were taxed. Taxing them a second time could be seen as double taxation.
Parents certainly cannot deduct school fees, school levies or incentive payments from their taxable income. So unlike payments made by companies or corporations, which could be regarded as salaries and which come out of pretax income, incentives and all other payments to schools come out of post-tax income, and Zimra already has its share.
Objections to the second issue, whether Zimra can levy presumptive taxes and have these deducted from teachers’ Government salaries, seem to rest on even stronger grounds.
It has been made clear that incentive payments are a temporary measure, that there is no fixed figure laid down, and that there is no guarantee that they will be made next month, nor at what level if they were paid. No teacher could sue if they were not paid an incentive, and in fact tens of thousands of teachers are not paid incentives.
Even if legal opinion eventually comes to the conclusion that incentives are taxable, and that decision might well have to remain in doubt until the courts have heard a test case, it appears that any taxes would have to be deducted by the schools and that all teachers in receipt of such payments would have to submit annual tax returns for a final assessment.
We recognise that Zimra has the legal duty to hunt down all taxable income earned by everyone. So no one can complain that Zimra has raised the issue.
But the way it has been done stinks.
Surely, for something that affects so many people and is open to a variety of interpretations, the correct path would have been to involve the education ministry from the very beginning.
At this stage legal advice could have been sought from the Attorney General and if there was still doubt an urgent test case could have been argued before the High Court.
Should Zimra be the winner on one or both its submissions, then it and the education ministry, with the Ministry of Public Service involved as well, could work out a suitable procedure for revealing and reporting the actual incentives paid, and a suitable way for the calculated tax on those sums to be paid, either through a withholding tax or through a direct deduction, which would change monthly, on teachers salaries.
Zimra would benefit from such an approach since the legal issues would have been resolved in advance and the application of the law would be a matter for the education ministry to enforce, rather than have odd tax officers wandering around threatening headmasters who do not know where they stand.
Perhaps the time is approaching whereby the whole incentive system needs to be formalised and the legal issues sorted out.
Incentives for teachers were permitted to solve three pressing problems. Teachers were leaving the profession or emigrating to other countries where trained Zimbabwean teachers are valued highly.
School-leavers with high levels of academic attainment were rejecting the profession because it seemed so poorly paid in Zimbabwe.
And finally those teachers who remained in their posts were having to run private businesses, if only selling chickens and vegetables to each other, to make ends meet; the children were not getting the 100 percent attention they deserved as a result.
The intention from the very beginning was that these incentives would be reduced and eventually eliminated as teachers’ pay rose. The money going on incentives could then be reassigned to other school expenses to upgrade facilities.
We have suggested before that incentives should be paid out of levies by the School Development Association, rather than by parents directly to teachers. This would eliminate one potential abuse, that teachers knowing who has paid will give more time to the children of the paying parents. SDAs can legally enforce levy agreements. Such a system would also, if Zimra wins its battles, ensure that there was a monthly list of who was paid what.
But we now hope that Zimra, should it wish to pursue the matter, as it is entitled to do so, will cease the ad-hoc methods so far employed, engage the education and public service ministries, sort out the legal issues and, if it is found that incentives are taxable income, work out the fairest way of assessing and raising those taxes.
Zimra is normally helpful, and will assist taxpayers calculate the minimum they need pay, and that helpfulness needs to be carried over to its dealings with the tens of thousands who receive incentives.
Online Reporter