Income Tax Threshold Increased

A major relief for the people of the country as the interim government has taken a major fiscal policy decision, to assist the low income earners of Fiji.

Acting Interim Finance Minister Filipe Bole has announced that cabinet has decided to increase the income tax threshold from $9,000 to $15,000. This means that from the 1st of next month, people earning up to $15,000 per year will not pay any income tax.

Apart from the increase in the income tax threshold, there will also be a reduction on selected basic food items to a new duty rate of zero percent.

Food items that will have zero duty will include white rice, brown rice, tinned fish including sardines, tuna and mackerel, other canned fish and crude oil. Consumers will not have to pay any duty on these items from next month.

Bole has also announced that the interim government will also remove VAT from locally produced eggs for local consumption, in an effort to ensure that people in the lower income bracket and those living at subsistence level have access to protein in their diet at affordable prices.

No decision has been made on how long this relief will be offered.

Bole said cabinet's decision yesterday was part of the interim government's efforts to mitigate the current rise in food prices for the low income earners. He said there has recently been a global increase in the prices of consumable goods, which has been mainly caused by a rise in fuel prices, a switch to bio-fuels, and investment in commodities future.

Bole said this type of inflationary pressure, has been caused by external forces which are coming from shortages in the supply of food and oil to the global market.

Cabinet based its decision on a submission by the Acting Interim Finance Minister Filipe Bole and Bole confirmed that he spoke to Interim Finance Minister Mahendra Chaudhry and informed him about the changes as he is out of the country.

Meanwhile, Finance Ministry officials said the loss in income tax and duty after this decision will not be felt as tax revenue collections have surpassed expectations by $21million.

FIRCA Chief Executive Jitoko Tikolevu has also announced that the tax collection is at an all time high since 2002. Tikolevu said net tax revenue collection for April totaled $102million, representing an increase of 31.6 percent over the same period last year.

Net income tax collection for the month of April exceeded the forecast by $10.9 million. Net VAT collection for the month of April recorded $38.7 million, representing an increase of 23.7 percent and above the forecast, by $8.1 dollars. Fiscal duty collection also increased by 24 percent on year on year basis and continues to be dominated by collection from mineral fuels, motor vehicles, machinery, meat, beverages and spirits, iron and steel and dairy produce.