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Tax relief for low income earners

 

Bereng Mpaki

LOW income earners have been granted tax relief after Finance Minister Moeketsi Majoro announced a three percent adjustment to their taxable income.

Dr Majoro announced the new measure in his 2017/2018 budget speech in parliament yesterday.

“It is proposed that the applicable tax credit and threshold be adjusted by 3 percent to avoid graduation into higher tax brackets which can reduce and undermine the value of the take home pay of employees,” Dr Majoro said.

“It is, therefore, proposed that the annual tax credit be increased from M6,725 to M6,927, so that the lowest annual salary at which individuals start paying tax is increased from M33,625 to M34,634, and the threshold for higher earners be increased from M56,964 to M58,673.”

The tax reduction was cautiously welcomed by the Managing Director of Lesotho Postbank, Molefi Leqhaoe, who warned that government would have to find alternative means of generating income to offset the possible revenue loss arising out of the proposed tax threshold review.

“Yes it improves the disposable income of the tax payers. But the question is how are we going to fund the difference.

“It would be better if the government coupled this move with a strategy to help the taxpayers save their increased disposable income towards job creation and not just to consume it,” Mr Leqhaoe said.

 

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