The government is considering introducing a cap on salary deductions imposed by the Namibia Revenue Agency (NamRA) to recover outstanding tax debts, amid concerns that deductions can leave affected employees struggling to meet basic household expenses.
The proposed cap would mean NamRA could still recover outstanding tax debts directly from employees’ salaries, but the amount deducted could be limited to ensure workers retain a reasonable portion of their monthly income for essential living expenses.
No specific percentage or maximum deduction has yet been proposed, with the government planning consultations before determining how the limit would work.
Finance Minister Ericah Shafudah said the proposed measures would include limits on salary deductions, negotiated repayment arrangements, reviews of historical tax debts and possible relief on penalties and interest.
Responding to questions from parliamentarian Evilastus Kaaronda in the National Assembly, Shafudah said the Ministry of Finance would consult NamRA, organised labour and employers’ organisations on an appropriate ceiling for deductions.
“The principle that an employee must retain a reasonable portion of his or her remuneration to meet basic household needs is sound, and is consistent with the approach applied to other deductions from remuneration,” Shafudah said.
She said the proposed cap could initially be introduced through administrative guidelines issued by NamRA, with amendments to tax legislation considered where necessary.
In practical terms, the proposed changes could prevent outstanding tax debts from being recovered through salary deductions at a level that leaves an employee with insufficient disposable income. Instead, the amount recovered could take into account the taxpayer’s ability to pay, while the balance of the debt is settled over an agreed period.
The minister acknowledged concerns that deductions made to recover outstanding tax liabilities were placing financial pressure on workers and their dependants, particularly where debts were disputed or dated back several years.
“The Ministry acknowledges, however, that where such deductions are effected without due regard to the taxpayer’s capacity to pay, or where the underlying debt is disputed or of a historical nature, they may occasion genuine hardship to the affected employee and his or her dependants,” she said.
NamRA is legally empowered to recover outstanding taxes by directing employers to deduct specified amounts from employees’ salaries.
However, the ministry will request a comprehensive report from NamRA detailing salary deductions made to recover tax debts, including the nature and age of the liabilities and safeguards applied.
The government also plans to review historical tax assessments inherited from the former Inland Revenue Department, which administered tax collection before NamRA was established.
Shafudah said historical debts would be verified, while liabilities that cannot be adequately substantiated or resulted from inaccuracies during the migration of taxpayer records could be corrected or written off in accordance with the law.
The ministry is also considering a shift towards negotiated repayment arrangements, which could allow employees to settle outstanding tax obligations through affordable instalments agreed in advance instead of facing deductions without prior consultation.
Under the proposed approach, taxpayers would also be informed of the basis of their outstanding debts and given an opportunity to verify or dispute the amounts before salary deductions are pursued.
“Taxpayers must be duly informed of the basis of any debt, afforded a reasonable opportunity to verify or dispute it, and offered a suitable payment arrangement before recourse is had to deductions from remuneration,” Shafudah said.
The ministry will further consider possible relief on penalties and interest for qualifying taxpayers, drawing on previous tax arrears relief measures.
Such relief could reduce the additional cost of accumulated penalties and interest, allowing qualifying taxpayers to concentrate on repaying the principal tax amount.
Shafudah said the ministry would engage NamRA’s board and executive management to strengthen taxpayer education, complaints procedures and objection mechanisms.
She said NamRA’s responsibility to collect taxes must be balanced against the financial welfare of taxpayers and their dependants.
“No revenue objective can, or shall, be pursued at the expense of human life,” Shafudah said.
The proposed measures remain under consideration, and the government has not yet announced the level of the proposed salary deduction cap or when it could take effect
