New Income Taxes In Fiji

Rates Are Still Low on Incomes Under £1,000 p.a.

THE Government of Fiji has found it necessary to increase the rates of income tax payable in the Colony, At first sight, this would appear a retrograde step, because Fiji, on account of her low rates of income taxation, has been likely to become a haven for thou sands of people with small fixed in comes from pensions and investments, who have been cruelly and ruthlessly taxed by the Socialistic Governments of countries like Australia and New Zea land, and who will get no mercy in the post-war period.

However, the new rates do not seri ously affect incomes under £l,OOO per annum; it is company profits and per sonal incomes substantially over £l,OOO which will bear the really heavy in creases. Fiji still may be regarded as a place of refuge for the family that is trying to live reasonably well on an in come of between £5OO and £l,OOO.

The new taxation rates and conditons are contained in two Bills.

One of the Bills amends the Residen tial Tax Ordinance, 1923, by increasing the maximum annual tax that may be determined by Legislative Council from 30/- to 40/-. Before World War II the Residential Tax was £1 a year. Tax payers were then required to pay an extra 10/- as a War Tax. The new Bill removes the power of Council to describe anv part of the Residential Tax up to 40/- as a tax imposed for war purposes.

The second Bill amends the Income Tax Ordinance. It abolishes the War Tax at nresent payable, and provides for payment of normal tax on taxable in comes on a sliding scale which rises from a minimum of 1/3 in the £l, by .012 of a penny for everv £1 of taxable income, to a maximum rate of 6/3 in the £1 on incomes of £5.000 and over.

In other words, on the first £1 of tax able income the tax is l/3.012d.. on the second £1 it is 1 3.024 d„ on the third £1 it is and so on until on £5,000 the tax has reached 6/3. That is the maximum normal income tax. and on each £1 beyond £5,000 6/3 is payable.

The Bill provides for the payment of surtax upon all income in excess of £l,OOO at rates beginning at 1/3 in the £l. pnd rising to a maximum of 10/- in the £1 on income in excess of £3O 000.

On anv of his income above £30.000, therefore, a taxnaver will nay maximum income tax, or 6/3 in the £l, plus maxi mum surtax, which is 10/- in the £l, or a tot q 1 of 16/3 in the £l.

The Bill varies the existing statutory allowances bv making separate provision in resnect of the taxpayer, his wife, Children and dependents end by provid ing that no allowance shall be conceded in respect of a child who has an in come of his own of more than £5O. In effect, most existing statutory allow ances are not verv much changed.

The existing income tax exemption conceded in respect of pensions will be deleted if the new Bill is passed. This does not apply to war pensions.

THE Bill increases the rate of tax pay able on the profits of a company from 5/- to 6/3 in the £l. It pro vides for the payment of tax upon the income of an individual or company resi dent or incorporated in the Colony, not withstanding that such income is not earned or brought into the olony, unless it has already been taxed in some other part of the British Empire.

Another provision in the Bill is for the

issue of income tax “clearance” certifi cates before a person can leave the Colony. rE effect of the proposed revised rates of income tax can best be il lustrated by quoting examples. A single taxpayer, without dependents, pays no income tax on the first £l5O of his income. If he earns £5O more (that is, £2OO a year) at present he pays in in come tax £3/2/6 a year—so times 1/3.

Under the new rate, with its sliding scale, he will pay in income tax £3/5/- a year.

If his income is £5OO at present, he is liable to pay a total of 350 times 1/3, or £2l/7/6, plus £3/10/- War Tax, a total of £25/7 6. The new Bill requires him to pay £2B. If his income is £l,OOO a year he pays at present £B7/2/6. The new tax will be £B9/5/-.

Beyond £l,OOO, surtax is involved, and the differences between present and pro posed taxes become greater. If. for in stance, a single taxpayer, without depen dents, has an income of £2,000 a year, he now pays £282/2/6 in income tax. Under the proposed Bill he would pay £349/5/-.

Under the new Bill, as at present, a married taxpayer will not be taxed on the first £4OO of his income. He gets a further £5O exemption for each child, un to a total of five children. A married taxpayer, without children or depen dents, at present pays £6/5/- in tax on an income of £soo—loo times £l/3, be cause the first £4OO is exempt from tax.

The new Bill requires him to pay £6/15/-.

If his income is £7OO a year at present he pays £2l/15/-. Under the new rates he would pay £23/5/-. A married tax payer, with two children or dependents, pays no tay on the first £5OO of his in come. If he has £6OO, he pays at pre sent £6/5/-; under the new rate, £6/15/-.

On £BOO. he now pays £2l/15/-; the new rate is £33/5/-.

It is in the higher income brackets that the nroposed taxation increases are most clearly seen. A taxpayer with an income

of £lO,OOO, for instance, will pay £l,OOO more than he pays at present.