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Business News of Wednesday, 1 June 2016

Source: Myjoyonline.com

Pensioners condemn controversial tax on pension savings

The National Pensioners Association has condemned a new tax regime that will to take 15 percent of pension savings with the Social Security and National Insurance Trust (SSNIT).

Per the provision in the Income Tax Act (2015), persons who want to access their pension contributions before they are due for retirement will be taxed by up to 15% of the amount they withdraw.

The tax, however, does not apply to pension benefits of pensioners.

A key negotiator for the National Pensioners Association’s during discussions with the National Pensions Regulatory Authority (NPRA), Benjamin Asuman, told Joy News he has not been officially consulted on the new policy.

He observes that the new tax would further lower their already meagre pensions benefits.

“I don’t think it is fair. It is not fair at all. In the first place our pension keeps running down as a result of inflation. Evidently we are not benefiting from the economy in any way. We have contributed all over the years and if it should be taxed again it is not fair at all,” Benjamin laments.

Mr Asuman told Joy News Wednesday he finds it difficult to come to terms with government’s decision to tax pension savings because it is not done in many countries.

The new tax regime, part of the recently introduced Income Tax Act (2015) will also see allowances taxed – a move that analysts say is part of a broader government policy to ramp-up the state’s dwindling coffers.
Business analysts see the new tax regime as unfavourable for new investments.

Finance Minister, Seth Terkper, however, defends the tax regime, explaining allowances and pensions are being taxed under the new income tax law because they are all forms of income irrespective of how they are earned.

He said this has become necessary because some tax payers have been evading tax by shielding their incomes under the previous regime that had many loopholes.