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Income tax cut

Timoci Vula
Saturday, November 26, 2011

PERMANENT secretary for Finance Filimoni Waqabaca, on a few occasions at yesterday's 2012 Budget conference, mentioned there were giveaways in next year's allocations.

Perhaps, the 99.4 per cent of Fiji's taxpaying population will agree - they should expect to see an increase in their take home pay come the new year.

Effective January 1, 2012, government will reduce or eliminate taxes for more than 46,539 taxpayers.

Through that, it forecast to put back $53.1 million back into the pockets of Fijian taxpayers.

In his 2012 Budget address, Prime Minister and Finance Minister Commodore Voreqe Bainimarama said 11 salary brackets would be created so that the PAYE (pay as you earn) tax structure became progressive.

The tax threshold will increase from $15,000 to $15,600 in 2012 - meaning anyone earning up to $15,600 will not pay tax.

The marginal income tax rate for lower band ($15,601- $22,000) will be reduced from 25 per cent to 7 per cent; the rate for middle income tax band ($22,001-$50,000) will be reduced from 31 per cent to 18 per cent; and the income tax marginal rate for the top band ($50,001-$270,000 to $1,000,001 plus).

For instance with the new system, anyone earning $20,000 a year, pays about $1500 in taxes. This will be reduced to $300 in the new system.

"If you earn between $50,001 and $100,000, your tax rate will be 20 per cent.

"This means, if you are earning $70,000 a year, currently, you're paying about $17,000 in taxes. In the new system, you will pay about $9500. The new system puts more than $7500 back into your pocket," Commodore Bainimarama said.

"The bottom line is that for the vast majority, taxes will decrease or be eliminated altogether," he said, adding the 99 per cent of taxpayers were shouldering most of the tax burden.

Commodore Bainimarama also announced that as of January 1, government would institute the social responsibility levy for anyone earning over $270,000 a year.

"We believe that people at the top end should help those at the bottom," he said.

However, he added that the levy was not permanent. It would be reduced and eventually eliminated as people progressed from welfare programs or when Fiji's gross domestic product (GDP) grew.





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