Negative income tax refers to transfer of payments given to families whose household income fall below a predetermined amount and qualifies them for a supplemental payment from the government. While introducing the Negative Income Tax (NIT) we are improving the living of an employee as the latter will have a guaranteed minimum wage. Thus, there will be no need for the staff to do any overtime and also to do any additional part time job. Furthermore, we are creating a new way of living for the staff, he or she will be free to have a better social life with his/her family and could practice some sports which will be good for one health.
However, on the other side, it would disadvantage the employer of an organisation, as the productivity of the staff would decrease. The Company will have to hire more staff, as those already employed would not do any more overtime to achieve production aims, as they are now guaranteed to receive an additional amount of pay to reach the ceiling amount set up. Hence, the organisation would have to employ more staff to meet demand. Consequently, the profitability will be at risk, the company has to incur additional expenses to maintain its profitability by hiring more staff. I believe that, by introducing the Negative Income Tax (NIT), we are only easing as a relief, not as help, the income of a lower income earner and also increasing the public debt gradually. Consequently, we could increase largely the social budget by introducing new social aids and this would be a better way to help the poor and increase their standard of living and eradicate the extreme poverty.
Saoud Mohammad Nuzeerally