Naidu defends committee’s tax proposal

The Fiscal Review Committee did not recommend any reductions in personal income tax on people with high taxable incomes.

The recommendation only noted that Social Responsibility Tax (SRT) be abolished and replaced with a new personal income tax bracket for individuals with high taxable.

That’s the response issued by the committee’s chairperson Richard Naidu in response to what senior Opposition Member of Parliament Premila Kumar said in Parliament last Tuesday.

Ms Kumar said the committee’s recommendations caused more harm than good to the economic recovery where the poor were punished and selective few rewarded. “For example, those earning more than $270,000 had a reduction in personal tax and their social responsibility tax was removed, causing a revenue loss of $2.2M,” she said.

“Who benefitted – the rich? Lawyers and accountants, CEOs, and company directors were the beneficiaries.

“Figures don’t lie. There are preliminary indicators of our economy hitting the brakes.”

‘Read the report’

In response, Mr Naidu urged Ms Kumar to read the committee’s May 2023 report.

In that report, the recommendation included an increase in corporate tax.

“The Fiscal Review Committee did not recommend any reductions in personal income tax on people with high taxable incomes,” Mr Naidu said.

“The committee recommended only that the SRT be abolished and replaced with a new personal income tax bracket for individuals with high taxable incomes (mostly salaried executives, sole proprietors and people in partnerships).” Mr Naidu said this would be at the same marginal tax rate and would simplify the tax system without reducing the total tax paid by those individuals.

He said these recommendations can be abstracted from paragraph 4.43 of the report, on page 56. “However, the committee also noted that both the Fiji Revenue and Customs Service (FRCS) and the International Monetary Fund (IMF) had recommended that the top rates of personal income tax come down,” Mr Naidu said.

“This was partly to do with the distortionary effects of high tax rates.

“Ms Kumar is welcome to contact the committee members or the committee secretariat to clarify these matters.”

“Ms Kumar is welcome to contact the committee members or the committee secretariat to clarify these matters. Richard Naidu Fiscal Review Committee chairperson