Senate hikes misc excise tax to 10%, tables sales tax, repeals 2% wage tax & increases Fono’s budget
The Senate has agreed to hike the current 5% miscellaneous excise tax, instead of gradually repealing it — as proposed by the Lolo Administration — as well as repeal the 2% wage tax, which is paid by wage earners only.
The Senate has also approved in second reading its version of the fiscal year 2018 budget, after increasing the Fono’s budget by $500,000 by reallocating funds from five projects under the FY 2018 Budget Special Programs, overseen by the Governor’s Office.
The Senate Budget and Appropriations Committee, after hearing from the ASG Revenue Task Force and several top executives of local major businesses, met yesterday to debate and decide the fate of two Administration revenue measures.
One measure seeks to implement a 7% sales tax, which upon approval would also repeal the 2% wage tax, effective January 2018.
The second bill gradually phases out over a five-year period the 5% miscellaneous excise tax, starting January 2019.
Committee chairman Sen. Magalei Logovi’i told senators he believes that sufficient testimonies — from ASG and the private sector — have been presented on these two measures.
To start off discussions, Magalei suggested focusing on the excise tax measure while setting aside the sales tax, which has raised concerns from the private sector, as far as implementation and collection.
For the excise tax, he said procedures are already in place for collection, which is done at the port. Business representatives also noted this during their testimonies.
Top executives of Haleck Enterprises and Neil’s ACE Home Center suggested last week during a committee hearing to increase the 5% excise tax up by 2% or 3%, instead of implementing a 7% sales tax, which they say is too high and would require businesses to spend additional money to upgrade computer software to effectively collect a sales tax, and hire additional personnel. (See Samoa News Sept. 18th edition for details)
Similar testimonies were provided by other business executives, who also pointed out that Customs already has in place procedures to collect the excise tax and this is a very fair way of collecting this tax, in which all businesses pay the same amount, instead of a sales tax, where there is no guarantee that all monies collected by some businesses from the sales tax will be reported accurately to the government.
At yesterday’s committee discussion, Sen. Nuanuaolefeagaiga introduced a motion to add on another 5% to the current miscellaneous excise tax, and agreed with Magalei to set the sales tax aside for now.
Sen. Fa’amausili Mau Mau Jr., supported Nuanuaolefeagaiga’s motion, and so did Sen. Tuaolo Manaia Fruean who suggested repealing the 2% wage tax and adding this percentage on, along with another 3%, to total the 5% noted in the committee’s amendments.
Tuaolo pointed out that the government is having difficulty collecting the wage tax and suspects the same will happen with a sales tax.
Other senators joined in, supporting the committee’s amendments, which calls for a 5% increase to the current 5% excise tax — that would make it 10% — to become effective in January 2018, the same time of the repeal of the 2% wage tax — which is currently included in the sales tax proposal.
The committee’s amendments are now being worked on, to be included in the measure before reporting it to the Senate floor for a vote.
Also yesterday, the House Budget and Appropriations Committee discussed and agreed to amend the Administration’s proposal hiking port fees and charges, with one amendment — deleting from the language of the bill, all provisions which gives the Port Administration director the authority to review all fees and charges every five years.
FY 2018 BUDGET
During yesterday’s session, the Senate approved in second reading its version of ASG’s fiscal year 2018 budget totaling just over $395 million with amendments, which reallocates $500,000 from five projects under the Special Programs to the Fono.
The Senate cut $50,000 each from the Governor’s Mansion Restoration and Museum Restoration; $100,000 each from the DPS Law Enforcement and Governor’s Office Consultant Fees; and $200,000 from the Western District Youth Multipurpose Center.
As it stands now, the Fono’s budget increased from $6.91 million to $7.41 million. The amendments however, do not inflate the final budget total, because the funds were reallocated from Special Programs to the Fono.
Senate President Gaoteote Palaie Tofau requested that the Senate Budget and Appropriations Committee move forward the House version of the bill, to include the Senate’s amendments.
He asked that the House version be reported today to the floor for second reading, saying there is still time for the Fono to make a decision, in the event the House disagrees with the Senate amendments, to the House budget bill.
The Fono must approve one version of the budget bill and send it to the governor for review and approval before the start of the new FY 2018 at 12:01a.m on Oct. 1st.
Magalei then announced that the newspaper — referring to Samoa News — was wrong in its reporting yesterday, regarding the discussion on the $700,000 in the FY 2018 Budget’s Special Program.
He said the committee discussion, held Wednesday, focused on the $700,000 that the Administration put in the Supplemental Budget for the Fono.