Thursday, 8 May 2008 9:43 AM

Chamber Urges Government to Reverse Policy on Taxing School Fees

The Solomon Islands Chamber of Commerce and Industry (SICCI) strongly urges the Government to reverse its policy of taxing the payment of school fees paid by employers on behalf of employees.

SICCI highlights that with high unemployment levels, a low literacy rate and youthful population, the government should be using any means at its disposal to increase the number of young people in formal education.

"Taxing the payment of school fees acts a disincentive for workers to educate their children. This policy is the exact opposite of what is needed for the country," the Chamber adds.

It states that exempting school fees from income tax promotes investment in the future workforce of the nation and gives incentives to workers to find employment with socially responsible employers.

"The private sector directly paying for employees' school fees also lightens the burden of education for the government. Employees' children may otherwise be seeking government sponsorship for their education so encouraging private sector funding makes financial sense for the government."

"A more appropriate policy would be to exempt such payments from income tax and additionally enable those people who pay for school fees from their own savings or after tax income to claim tax rebates for school fees."

It also expressed its dissatisfaction with the unfair application of the tax on school fees. In the Income Tax Act Third Schedule, Paragraph 3 under Exemptions it lists:

"The education allowances paid to officers in the public service in respect to the education of their children."

"This double standard of taxing private sector but not public sector employees is completely unacceptable. The taxation of income should be uniform across sectors and not discriminate against certain groups."

Furthermore, it is the understanding of SICCI that the tax on school fees was not enforced in the private sector due to the exemption of civil servants from the tax.

"It is therefore unfair to demand back dated payments of this tax from firms who were acting in good faith when not paying the tax and on which undue financial pressure will be put."

The Chamber has written to the Prime Minister to request that the Government seriously reconsider its position on this matter.

The SICCI is always willing to assist the Government in formulating policies that will benefit the nation.