Question

CEF 05-2021 Income Tax review request

Review of income tax request

The current personal allowance afforded to all workers on Ascension Island (before Benefits in kind etc are deducted) is a mere £3,500, in comparison, the allowance in the UK is £12,500 though it is appreciated that living costs are higher there.  It is felt that workers here should be granted a higher allowance than £3.5k.  This rate was set when taxes were first introduced, and owing to inflation and general price increases, cost of living here has risen considerably.

Could an increase be considered to the allowance to possibly £7k?

AIG could impose a tiered tax system like that in the UK, creating a more fair spread of tax paid with those earning more paying more, such as below for example:

Up to £7000                        0%

£7001 - £18,000                  20%

£18001- £50,000                 25%

Over £50,001                       30%

Figures used as examples are for demonstration only, actual pay bands and percentages would differ dependent on the findings of any review carried out…

Food allowance should be not be taxed.  People already pay additional charges/mark up on foods bought from shops.

AIG Response 

With the budget process just being completed, an undertaking was given that there would be no increase in taxes in this current financial year. However, there is no reason why a review cannot be undertaken when time and resources allow.

Council should however consider that AIG would need to maintain the level of taxes currently being received, if not improve on it. The figures used for demonstration would not achieve this, given the average level of wages on island. The other alternative would of course be to consider different avenues of taxation.

In respect of food allowances not being taxed, no tax is levied against food imports, with duty only being applied to tobacco and alcohol. The additional charges/mark-up on purchases implies a duplication of taxation, but would not be the case and is only what the business is adding to cover their costs and realize profits. Food allowance is applied differently through the various organisations, but it is a source of income whether it be as cash or a benefit in kind and is therefore taxable as per legislation.

Councillor George

Submitted: 20 April 2021

Response: 17 May 2021