Small decrease in Corporate and Personal Income Tax

The ruling New National Party (NNP) government of Prime Minister Dr. Keith Mitchell has taken a decision to provide some relief to individuals and businesses liable to pay income tax by reducing their payable amount by 2%.

The motion to make this possible was tabled in the last sitting of the House of Representatives for the year at Parliament Building at Mt. Wheldale, St. George by the Leader of Government Business in the House, Works Minister Gregory Bowen.

The senior government minister told legislators that the schedule about the tax reduction has already been made public by the PM Mitchell in his capacity as Minister for Finance in his budget address and debate in November.

In explaining to Parliament the effect of the reduction, Minister Bowen said: “This is simply reducing the rate of taxes for persons that are not corporate persons but individual persons. Where their chargeable income above $24,000 was at a rate of 30%, this amendment will reduce it to 28% as indicated by the (Finance) Minister and for corporate tax, corporate persons, their income tax will also be reduced from 30% to 28% Mr. Speaker.

“And we know that the principle of keeping Personal Income Tax the same as the Corporate Income Tax, so that nobody is tempted to move one into the other and get from their businesses if they are directors or owners of such business, Mr. Speaker,” he said.

In his own address, Prime Minister Mitchell said this move on the part of government can encourage increased economic activity in the country.

He said: “This falls directly within the whole philosophy of this government, which is to encourage the private sector to increase activity in general and by so doing expand their operations, at the same time being able to provide jobs and at the same time to add economic activity of the country as a whole.

“We think that is an incentive. That is necessary because the less taxes that they have to pay means that as long as they’re paying their fair share (it) will certainly give them the room space to increase their operation and it is in the benefit of all concerned in the country.

“…Similarly, this government firmly believes that the more disposable income that exist among the workers of the country, the more we can see people taking initiatives to increase activities and broaden areas of opportunities and by so doing may able to create jobs.

“We hope in the not too distant future we can move to even reduce the taxes even further because as long as it will not injure the fiscal situation in the country, then the government is better off because it’s sometimes not ideal for government to be getting too much money from individual income earners in the country, and the same time reducing the ability to do things for themselves so that people don’t have to depend on one income stream for survival.

Minister of Health and Parliamentary Representative for the Constituency of St. George South, Nickolas Steele voiced support for the tax reduction.

This move by government, he said is in keeping with the promise made to the country to give benefits to every sector once it is allowed by the fiscal space.

“I think it’s essential to say that we did make a commitment that once there is a fiscal space allowing in all sectors, we would do our best as a responsible government to make sure that each and every sector would receive some sort of benefit. And for the private sector, individuals who pay personal income tax, they would be most appreciated. I’m sure like anybody else, would be asking for more, but they would be most appreciative of this and also to give support to the government policy that has maintained a certain amount of stability with respect to Corporate Income Tax and Personal Tax – specifically the inability or deterrence of tax avoidance, tax evasion in keeping Corporate Tax and Personal Income Tax at the same levels.

Therefore, it’s minimal incentive, if any, by any individual shareholder of a corporate entity to move expenses from one side or the other. So, we’re keeping that policy throughout and moving forward”, he added.

The Mitchell-led government has often indicated that its financial options are often dictated by the Fiscal Responsibility Legislation (FRL) struck with the Washington-based International Monetary Fund (IMF) to control Central Government spending.

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