THE Government is expecting to debate either to impose tax exemption on low income earners or leave the tax threshold as it is.
The Income Tax Amendment Bill 2019 which was put to Second Reading on Wednesday will be a lifeline for low income earner if the bill earns more support and passed in parliament.
Minister of Finance and Treasury Hon. Harry Kuma said the amendment will increases the personal tax exemption also known as the tax free threshold from SBD$15,080 to SBD$30,080.
He said the increase in PAYE threshold will not only benefit those who earn up to SBD$30,080 annually or up to SBD$1156.92 per fortnight but it will also reduce the tax burden on the high income earners as the increase in the threshold will raise the level of which the various tax rates takes effect.
“This bill if pass will sees approximately 2,334 low paid employees become exempt from Pay As You Earn (PAYE) Tax.
“It will also make life much easier for all low income earners to pay personal income tax at their disposal.
“This single tax amendment is the most direct way of translating economic growth the ordinary wage earners and their families as it will exempt low earning individuals from paying PAYE tax and enable them to meet their basic needs.
“It makes no sense to continue imposing tax on low income earners as doing so it will eventually lead them to poverty,” Hon. Kuma said.
He said the issue of minimum personal tax exemption is overdue and has recently become more pressing with the recent increase of the minimum wages.
Hon Kuma told parliament that the Minimum Personal Tax Exception for Solomon Islands has remained unchanged for almost a decade and it has been the lowest in comparison to other tax jurisdictions in the pacific region.
“Mr Speaker, an important commitment of any good government is to ensure that lower income earning individuals are able to support themselves and their families.
“By raising the Personal Tax threshold the government will improve incentives for Solomon Islanders to work, serve and invest.
“Reforms such as this create cost for the government by reducing the amount of revenue that can be collected.
“The government considers, however that meeting these cost is justified as the multiply effect will give birth to based tax to increase in 2020,” he said.
Hon Kuma said the government is ambitious to enforce the piece of legislation if passed as of 1st January 2020.
He said officials within his Ministry are ready to assist businesses in Solomon Islands to implement changes.