Senate passes in 2nd reading, bill to update local tax table
Updating the American Samoa individual income tax table to mirror the federal code would mean taxpayers would be giving less money to the government, according to testimony yesterday by ASG officials. Senators, who plan to share the information with their constituents, welcomed the good news.
American Samoa has used the year 2000 tax table, standard deductions and dependent exemptions for calculating personal income since 2001.
However, an Administration bill now before the Fono, updates the local tax table starting in tax year 2018, by adopting the US Internal Revenue Service tax table for standard deductions and dependent exemptions for the year 2004.
According to the bill, by tax year 2022 American Samoa’s income tax table will mirror the 2022 IRS tax table. Additionally, the tax table for each subsequent year — after 2022 — will be updated annually with the IRS tax table.
ASG Treasurer Uelinitone Tonumaipe’a and ASG Tax Manager, Tagoa’i Vaaimamao Poufa, testified yesterday morning on the bill before the Senate Budget and Appropriations Committee, whose chairman Sen. Magalei Logovii told the witnesses that, perhaps, the most important issue on this measure — and what senators want to hear — is how much taxpayers will get in return by amending the local tax table.
Tonumaipe’a, who is also vice chairman of the ASG Revenue Task Force, said the proposed amendment is to help take some burden off taxpayers. He emphasized that the amendments to mirror the IRS tax table targets “standard deductions and dependent exemptions” with the goal that by the year 2022, the American Samoa tax table is the same with the IRS.
Tagoa’i added that the federal government changes its standard deductions and dependent exemptions, after taking into consideration issues such as the cost of living and inflation. He then gave four examples on how the proposed amendments would help taxpayers.
One example is a single person, making $20,000 a year. The tax liability — based on the 2000 tax table — is $2,324. If the Administration bill is enacted into law, adopting the 2004 IRS table tax, then the tax liability for 2018 will be $1,454 — a savings of $870 to the taxpayer.
And by tax year 2021 — when American Samoa adopts the 2016 IRS tax table — the local tax liability is $995, which is a savings of $1,329.
For a married couple, with a total income of $20,000 and filing jointly with no dependents, current tax liability is $1,461. However, starting in tax year 2018, adopting the 2004 tax table, the tax liability is $800, which is the same amount up to tax year 2021.
All four examples provided by Tagoa’i show the taxpayer paying the current 2% wage tax, but come tax year 2018, the wage tax is not included, based on the Treasury Department’s assumption that by 2018 the 2% wage tax will be repealed, under a provision included in the 7% sales tax bill pending in the Fono.
Tagoa’i’s detailed explanation, which cited four examples, and delivered very clearly in the Samoan language, made senators very happy and there were no specific questions pertaining to the bill.
Magalei noted that this bill lightens the burden on taxpayers, and this was echoed by Senate President Gaoteote Tofau Palaie, who then wondered out loud, if passing this bill means people will get their tax refunds faster.
Tonumaipe’a said the government hopes that all revenue measures — including this bill — are approved by the Fono, to which Gaoteote asked, “Are you saying that if we pass all revenue measures” people will get their refunds at a much faster pace compared to the current long wait?
Tonumaipea replied, “yes” to which Magalei reminded the Treasurer to remember his reply because if all revenue measures are passed and tax refunds are not expedited, he will be called back to the Senate.
The statement resulted in a little bit of laughter from senators, Senate employees attending the hearing, and a smile from both Tonumaipe’a and Tagoa’i.
But Magalei appeared very serious, because during the hearing two senators voiced their concerns over the delay in issuing tax refunds, with one senator claiming that the Tax Office told him he has a tax refund, but this was not the case when he went to pick up the check.
With senators very pleased that taxpayers will pay less money on taxes under the proposed measure, the Senate unanimously approved the measure during the second reading at yesterday’s Senate session.
The bill goes through third and final reading next week Tuesday.