The 2012 National Budget has seen major cuts in personal and corporate taxes, targeted tax increases for luxury items and the introduction of some new levies to provide expanded services to the people.
Many have come out and said that this is a people’s budget but at the same time it is business friendly.
It is good news for people as personal income tax that you pay has been reduced for a number of brackets in the 2012 National Budget.
This means that the take home pay will increase for a number of people from January 01st next year as you will pay a lower level of PAYE or income tax.
Prime Minister and Minister for Finance Commodore Voreqe Bainimarama has announced that people earning $15,600 or less in a year will no longer pay PAYE.
The income tax threshold is currently $15,000.
The Prime Minister explained about further income tax cuts for people.
The income tax brackets:
For those earning $15,601 to $22,000, your tax rate will be 7 percent compared to the current 25 percent.
The fixed component in this bracket is eliminated.
For those earning between more than $22,000 to $50,000, the tax rate will be 18 percent compared to the current 31 percent and the fixed component will be decreased.
People earning more than $50,000 to $100,000 will pay an income tax rate of 20 percent compared to the current 31 percent.
The fixed component for this bracket will also decrease.
For those earning more than $270,000, a Social Responsibility Levy will be applied on full chargeable income, starting at 23 percent for income tax band from $270,000 to $300,000.
Commodore Bainimarama said the levy rate will increase by 1 percent for every income tax band thereafter.
Good news for companies as corporate tax has been reduced from 28 percent to 20 percent.
It is also good news for civil servants and the members of the disciplined forces as there will be a 3 percent pay increase across the whole of government from 01st January next year.
This will cost the government about $14.8 million.
All nurses and doctors will receive an additional 3 percent pay increase which means that they will receive a 6 percent increase in total.
It is even better news for Police officers as they will receive a 9 percent pay rise from next year.
This is due to the Job Evaluation Report implemented for the Police Force.
Regarding civil pensioners who fall outside the FNPF scheme, they will receive an increase on their existing entitlements.
The last time the civil pensioners received an adjustment, it was for one percent back in 2005.
This time former civil servants, their spouses, former members of the disciplined forces, war veterans, retired judges, former prime ministers and ministers and former members of parliament will all receive a 20 percent increase on their existing entitlements.
Looking at duties and taxes and please note that the duty rates are effective from today.
Excise tax has been increased by 3 percent for cigarettes and alcohol.
Fiscal duty has also been increased for imported cigarettes and alcohol by 3 percent.
To fight Non-Communicable Diseases, Commodore Bainimarama said fiscal duty has been increased for Palm Oil from 15 percent to 32 percent while duty on Mono Sodium Glutamate or MSG has been increased from 5 percent to 32 percent.
Duty on fruit and vegetables not grown or produced in Fiji has been reduced from 32 percent to 5 percent.
For sports fanatics, fiscal duty on imported specialized sporting equipment is reduced from 5 percent to 0 percent.
For those who love music, duty for musical instruments has been reduced from 5 percent to 0 percent.
The Hotel Turnover Tax will be renamed as Service Turnover Tax (STT).
The new STT will also apply to other tourism related services and these include rental car operators, in-bound tour operators, events management operators, recreation, entertainment and cinema operators, bars and nightclubs.
It will also cover bistros, coffee shops, restaurants with annual gross turnover of $1.5 million and above, all water sports, skydiving, river safaris, aircraft charter or hire with annual gross turnover in excess of $300,000 and home-stay operators.
The departure tax has been increased from $100 to $150.
To curb piracy, the government has introduced a specific duty rate of $1 on blank CDs and DVDs.
Duty has also been increased on imported canned fish from 15 percent to 32 percent.
Fiscal duty has been reduced to zero for machinery used in the manufacture of goods.
A 1 percent Telecommunication Levy will be imposed on all voice call charges to contribute towards the development of the ICT sector.
This levy applies for all landline phone bills or landline top up cards, mobile phone post pay bills and mobile phone top up cards or pre-pay bills.
This levy will be collected by service providers and remitted to FRCA on a monthly basis.
A new 2 percent Credit Card Levy will be imposed on all credit card purchases and payments, and outstanding balances.
A new Fringe Benefit Tax will be introduced at a rate of 20 percent from 2012.
Employers will be responsible for paying and remitting to FRCA the relevant amount.
The current employer contribution to FNPF which is allowed as a deductable expenditure will continue but at 50 percent.
All insurance companies that charge premiums for the government mandated Third Party Insurance will contribute 20 percent of all the premiums collected.
This new levy must not result in increased premium payments for the insured.
A new Customs Levy of $7,500 will be imposed on luxury cars of a cylinder capacity exceeding 2500cc but not exceeding 3000cc, upon point of sale.
This excludes single and twin cabs.
A new Customs Levy of $20,000 will be imposed on luxury cars of a cylinder capacity exceeding 3000cc, upon point of sale.
Commodore Bainimarama stressed that the government with FRCA will clamp down on tax evaders and there will be heavy penalties.
People have been asked to pay their taxes on time.
A new gold card system will be introduced for companies that pay taxes on time and they are expected to get some incentives.
Reactions and allocations:
Flour Mills of Fiji chairman Hari Punja has commended the Government for recognizing the local manufacturing sector.
Punja said a zero percent fiscal duty for any equipment and machinery purchased for the purpose of manufacturing will really help their industry.
Fiji Consumer Council chief executive officer Premila Kumar said next year’s national budget has put a lot of focus on the people and she has welcomed the reduction in the personal income taxes.
The Education Sector allocation has been increased to $257 million dollars for the upcoming year.
While announcing the budget for 2012, Prime Minister Commodore Voreqe Bainimarama said that the government is doing so to help decrease the number of school dropouts and expand the access of learning to those less fortunate.
6 new infant schools will be constructed in Cakaudrove, Wainunu, Vatubalavu, Yasawa and Lekutu.
Also the text book and bus fare scheme for students will continue.
Education Minister Filipe Bole said this will enable more upgrading and expansion of education in the country
Health Minister Dr Neil Sharma has supported the move to have a duty of 32 percent duty on tariffs on the importation of palm oil and mono sodium glutamate.
He added that this will help them to fight non-communicable diseases by creating awareness and preventative measures.
Last year the Health Ministry was given over $137 million, this year they have been granted $153 million, an increase of $16 million.
This is to aid in the delivery and upgrade of health services of which $2.8 million will go towards the upgrading of health centers in Bagasau, Tonia, Namuamua, Nayavu, Korovisilou and Cikobia.
It will also assist in the purchase of medical supplies.
Government will continue to resource the Water Authority of Fiji with a sum of $86 million allocated for 2012.
$300,000 has been allocated for the low income and rural households which cannot afford the upfront fee for the connection of water meters.
WAF acting chief executive officer Opetaia Ravai said they will consider applications on a case by case basis so that this is not abused.
The Government has allocated $63 million for major road projects to continue next year, this include the Buca Bay, Moto, Serea and Sigatoka valley.
The Government will also receive funds of $46 million from the Exim Bank of China and $45 million from the Exim Bank in Malaysia.
$8 million has been allocated for rural roads and $5 million to have an international seaport in Labasa.
The government has allocated $1 million to improve squatter settlements in Caubati, Omkar, Jittu, Cuvu, Ledrusasa and Sasawira.
Housing Minister Colonel Samuela Saumatua said along with this, half a million dollars has been allocated for Rural Housing and income generating projects.
For 2012 the targeted areas will be Nalotawa and Dobuilevu, Maumi
and Toga and Valelawa.
The Social Welfare Minister Dr Jiko Luveni said the increase in allocation to $39 million from $37 million will cater for women, social welfare and reducing poverty in the country.
Dr Luveni said one of the assistance that they will closely monitor is the $1.6 million increase that they have given to the food voucher program.
The Fiji Police Force’s 2012 Budget has increased by $8.3 million.
According to Assistant Commissioner of Police Joseph Penjueli, he said that with the 9 percent increase in their salary, they cannot confirm at the moment whether it will be backdated.
Penjueli added that since the police has the most number of employees in the civil service, the increase is justified.
The Forensic department has been allocated $1.6 million.
He stressed that with the rise in crimes in the country, this will help the Force to lift their performance in this regard.
The Military budget has increased by $5.2 million.
Military spokesperson Lieutenant Colonel Neumi Leweni added that though there will be no new deployments from next year, the increase is due to the additional troops in Iraq.
The Prisons and Corrections department has been allocated $4 million to cater for illegal immigrants and they have also been budgeted for a Cadet Program to develop their human resource.
Tourism Fiji has again received $23.5 million for next year but the focus is the service turnover tax.
Fiji Hotel and Tourism Association president Dixon Seeto said the Service Turnover Tax will bring more money to the tourism industry which will in the long run bring more tourists to our shores.
The financial assistance for Fijian Sugar Company will be adjusted to $40 million for the year 2012 and a further $700,000 will be allocated for the purchase of farming equipment and machinery which will assist the farmers better.
American Sugar is also assisting in works to finalize a cane quality payment structure which is expected to be implemented in the 2012 crushing season.
For this year the sugar production is expected to reach 200,000 tonnes which will be a significant change over last year’s levels.
The Reserve Bank of Fiji has also given a commercial banking license to a European bank to operate in Fiji.
The bank will start operations next year.
Story by: Fijivillage
National Budget 2012
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