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Low-wage earners get relief, high end pay more

By Giff Johnson MAJURO, Marshall Islands (Marianas Variety, July 9, 2010) - The first tax overhaul in 25 years has been endorsed by the Marshall Islands cabinet, with plans to cut taxes for low-income earners, increase taxes for high-income earners, and eliminate import taxes in favor of a new sales tax.

The recommendations are contained in a report to the cabinet from the Tax and Revenue Reform and Modernization Commission appointed by that was endorsed by the government’s top leadership. "Now the real work begins," said Finance Assistant Secretary Bruce Bilimon on Wednesday in reference to developing policy recommendations, public awareness and training.

The aim is for the new tax plan to be implemented in 2012. "We are not rushing it because it’s a big step," said Ading of the new tax plan.

The plan needs to be approved by parliament, the Ministry of Finance’s tax collection staff has to be trained, and public awareness raised, Ading said. "It will take a while," he said.

The tax commission, which included private sector and government officials, said the plan is not to create tax increases to existing taxpayers as a group.

Key points for the new tax structure:

Businesses with gross revenue under US$10,000 a year will pay a flat rate tax, while those in the US$10,000 to US$100,000 range will see two tax rates: three percent for trading companies, six percent for business providing services.

"The new system needs to be fair, benefit low-income families and be user friendly," Adding said.

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