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Government seeks to generate revenue

By Aurea Gerundio-Dizon KOROR, Palau (Island Times, July 22, 2010) – Tax measures pushed by President Toribiong finally passed in the House as incorporated in the proposed Fiscal Year 2011 national budget.

The House approved the taxes on wages and salary, scuba diving tax of $5 per day of diving, $20 departure tax to every person departing Palau and hotel room tax to be levied at 15 percent of the net room charge or $15 per room per night.

The budget bill approved by the House states that the taxes on wages and salary, scuba diving and hotel room shall be implemented effective January 1, 2011 while the $20 departure tax to all passengers regardless of citizenship shall take effect on October 1 this year.

With the taxes on wages and salary, if the annual salary is not over $8,000, the tax owed is six percent of the taxable gross income. For those who earn over $8,000 but less than $25,000, the tax owed is $480 plus 12 percent of the excess over $8,000. For those earning over $25,000, the tax owed is $2,520 plus 14 percent of the excess over $25,000.

The committee on ways and means and financial matters anticipated that these taxes, if enacted, will potentially increase much-needed additional revenue without much impact on the citizens and residents here.

The committee finds it necessary to be proactive in generating local revenue as recommended by numerous consultants and advisors such as the International Monetary Fund and the Asian Development Bank.

The House, however, rejected the proposed tax on imported food following recommendation by the committee stating that further study is required to ensure that this tax does not disproportionately burden those who are struggling the most financially.

Island Times © 2010 Island Times. All rights reserved

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