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Letters

Tax rates

February 10
08:54 2013

Professor Wadan Narsey
Suva

I notice from media reports that the Prime Minister’s Relief Fund received $50,000 from the ANZ Bank to assist in Cyclone relief and that Commodore Bainimarama would “like to thank ANZ for this very wonderful gift”.
How altruistic is this gift by ANZ?
In the last budget, Minister of Finance Bainimarama reduced corporate taxes from 30 per cent to 20  per cent and also income tax at the upper end from 30 per cent to 20 per cent.
There was absolutely no need for this given that Fiji’s taxation rates are already at the lower end in the region.
ANZ, which makes just over $40 million after-tax profit in Fiji annually, therefore received two real long-lasting gifts from taxpayers, courtesy of Commodore Bainimarama.
The first is that their after-tax profits will be increased annually by some 14 per cent or more than $6,000,000 this year, continuing indefinitely into the future.
The second wonderful gift is that by reducing taxes at the upper end from 30 per cent to 20 per cent, the upper income people at ANZ have also been given a salary increase of 14 per cent, and ANZ will not have to increase salaries for the next five years (while their revenues will keep increasing in line with inflation).
ANZ’s profits will therefore be that much higher into the future, depending on how many people they have in the 30 per cent tax bracket and the salaries they were earning.
All corporate taxpayers and upper income brackets in Fiji will be enjoying these benefits at the expense of middle and lower income tax-payers.

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