admin's picture

Successful tax collection cited

By Bernadette Carrreon KOROR, Palau (Marianas Business Journal, May 23, 2011) –- Palau President Johnson Toribiong said the current fiscal year will end with a budget surplus as a result of a high tax collection rate.

The Ministry of Finance disclosed that as of April, various taxes collected by the government have already reached 68 percent of the total projected collections for the 2011 fiscal year.

The government, according to the finance ministry, has collected more than US$25.3 million as of April with two months and a full quarter remaining before the fiscal year ends on Sept. 30. Non-restricted local revenue projection for fiscal 2011 is US$34,706,000.

If this trend continues it would be the second time that projections will meet collections. The last time was reported in 2005.

"We are refraining from considering a supplemental budget because of this optimistic picture. In fact, we may even realize a surplus. This is the result of conscious efforts from everyone in the executive branch to stay within the budget expenditure limits we imposed at the start of the fiscal year," Toribiong said.

He said through sound fiscal policies, the government proves it can live within its means.

"The past practices of overestimating local revenue collections only resulted in deficits, which doesn’t have to be the case. We are on track to reach our collection estimates or even realize a surplus without jeopardizing essential public services," he said.

Toribiong has also disclosed that the Compact Trust Fund has reached US$163.3 million as of the end of April after a slight dip earlier in the year.

The president will travel to Washington, D.C. in June to testify before the Senate Committee on Energy and Natural Resources in support of the Compact II financial package agreement signed in Honolulu last September.

Despite the anticipated fund surplus the government has not yet fully paid its employees’ contribution for the health care insurance program for the first quarter of the year.

Although under the health care law, the payment for health care is consolidated with the social security contributions.

Deadline for the payment of first quarter contributions was on May 2. According to the Social Security Administration office, which handles the health contribution collection, the government has only made partial payment.

Earlier reports showed that the government did not make a full payment during the first quarter installment.

As a result, employees were not able to use their Medical Savings Account until seven days after the April 1 commencement of the coverage.

At the time, the government only paid for the employees’ health care.

The Social Security Board of Trustees gave consideration to the government’s request to pay health care insurance contributions first. Social Security Administrator Gregory Ngirmang then said in an interview that the decision was made by the board for the sake of the employees who already got deductions in their salary. But the consideration, according to Ngirmang, would be given that time only.

Even though the government still has a balance due, employees will be able to use their medical savings account until September. "After six months, they will not be able to use their [account] if the government will not pay in full," the SSA stated.

Under the new health care plan of Palau, employees both private and government will be putting up 2.5 percent of their salary every month with a matching fund of 2.5 percent from employers.

Rate this article: 
No votes yet

Add new comment