The director-general of the Finance Ministry’s tax department told union leaders Wednesday that garment workers, currently guaranteed a monthly salary of $100, need to be prepared to pay an income tax once the minimum wage increases in January.
Many of the 600,000 workers employed in the garment sector can expect to start paying a 5 percent income tax if their total monthly salary, including bonuses and allowances, gets bumped past 500,000 riel, or $125, Kong Vibol told union representatives at a workshop at Raffles Hotel.
Next week, the Labor Advisory Committee, which is composed of representatives of the government, factory owners and unions, is expected to vote on a new minimum wage. Union leaders are demanding a $77 increase while factory owners are calling for a more modest $10 raise.
Mr. Vibol explained that under the 1997 taxation law, salaried employees are obliged to pay a portion of their monthly earnings in tax depending on what income bracket they fall into.
“Today we are holding a press conference to disseminate information to all unions,” he said. “We hope that brothers and sisters can explain to workers their obligation to pay tax and contribute to build the country together.”
But the worker representatives weren’t optimistic that their members would be receptive to the news.
“We do not have enough salary to cover our living costs and now the government asks us to pay tax,” said union representative Long Sokros. “We will talk to our workers and see what they think about this.”
Meng Ieng, another worker representative, predicted that the tax, which most workers are unaware of, would cause unrest.
“Workers will be angry…they will strike and protest to fight against it, seeing as they have low salaries and have not been made aware of this before.”
Apart from a day of action on September 17, which amounted to thousands of workers around the country gathering during their lunch break to call for a $177 minimum wage, the sector has seen only sporadic strikes at individual factories in the lead-up to an announcement of a new minimum wage.
A wave of strikes and protests in the sector in late December were sparked by the government’s decision to raise the minimum wage by only $15, well below unions’ demands for a $80 raise to what was then an $80 floor wage.