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Thursday, May 08, 2008

Government reduces tax threshold and removes duty on certain items

To help Fiji residents counter the rising cost of food prices (which is also being experienced internationally), Government has put in place some tax measures. These include :
  • increasing the income tax threshold for workers to F$15,000.00 from the current F$9,000.00; and
  • removed duty on basic food items including white and brown rice, tinned fish and cooking oil.

The Government has said that the moves are temporary measures only.

Read the related article in the Fiji Times which is reproduced below.

"Duty slashed, by Amelia Vunileba, Thursday, May 08, 2008

The interim Government has slashed duty on basic food items to fight rising prices.

In addition, the regime announced from June 1, the income tax threshold will rise from $9000 to $15,000.

This means 20,000 more people will be exempt from paying income tax.

It means the State will lose $20-million in tax revenue.

Duty on basic food items will be slashed to zero per cent in an attempt to arrest the rising cost of food and make it affordable for low income earners.

From June 1, there will be no fiscal duty on white and brown rice, tinned fish, including sardines, tuna and mackerel, other canned fish and cooking oil.

The removal of duty will cost the interim Government a further $1m.

The interim Government has resolved to remove VAT from all locally produced eggs for local consumption. But these policy changes are only a temporary measure.

Acting interim Finance Minister Filipe Bole said the changes were part of the interim Government's efforts to help low income earners in the face of rising food prices.

"This decision is the interim Government's response to the concerns raised by workers' representatives and civil society leaders and those representing the farming communities," he said.

Fiji Islands Revenue and Customs Authority CEO Jitoko Tikolevu said these changes would cost government $21m $20m from raising the tax threshold and $1m from zero fiscal duty.

He said they would have to work harder at collecting taxes. He confirmed that 19,000 to 20,000 people would now be exempted from tax following the rise in tax threshold to $15,000. Mr Tikolevu said 34,000 people would now be exempt from paying tax following the last tax threshold increase from $8840 to $9000 announced at the 2008 Budget in November last year by the interim Finance Minister, Mahendra Chaudhry.

The policy changes have been endorsed by Cabinet based on a submission Mr Bole made on Tuesday. Mr Bole said Mr Chaudhry, who is away overseas, was fully aware of this decision.

"This latest decision ... would mean a direct positive impact on low income earners who have been adversely affected with the rise in food prices," he said.

"Government will 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."

He said the average annual rate of inflation for the 12 months ending March stood at 5.8 per cent compared to 7.5 per cent for March 2007."

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