The administration’s multi year plan to improve local revenue generation is a mixture of amendments to existing laws, new revenue bills and repeals, and updates of certain money making laws.
The plan was developed by the ASG Revenue Task force and was presented to Fono leaders and lawmakers at a meeting last Thursday,
The main revenue earner in the plan is a 7% sales tax which is estimated to raise $24.1 million. A smattering of fees, and higher excise taxes for some items is to bring in more than $1 million.
A new tax called the alternative minimum business tax would have businesses paying 1% of adjusted gross income and this tax is supposed to net $2.3 million a year.
According to the Task Force over a three year period, on average only 13% of corporate tax filers paid over 1% income tax of gross revenue, leaving 87% paying less than 1%.
A limited liability corporation law which was introduced in the last session is to raise $641,000 and payroll deductions for ASG employees is to bring in $558,000. The fee is $1 per payroll deduction,
The administration also plans to make certain items which are now only subject to the 5% excise tax pay a higher tax which those category of items are not paying now.
These include non carbonated sugary drinks to pay 15 cents per 12 ounce container, heavy construction equipment to pay 25% tax and also used vehicles and second hand equipment to pay 25% excise tax.
The task force also proposes to increase port fees to rake in an additional $2.5 million. There’s no explanation of what the increases are.
The 7& sales tax would be phased in incrementally over five years beginning in January 2018.
At the same time, some existing taxes will be phased out, gradually.
The 2% wage tax that was passed during the Togiola Faoa administration for the LBJ hospital would be repealed, the 2000 tax table would be updated incrementally with the first change happening next year, when the 2004 table would be used.
The following year the 2008 tax table would kick in, the 2012 twill be in place for 2020, the 2016 table will be used in 2018 and in 2022, we would be using the 2022 tax table, the same as in the US.
Updating the tax tables would result in a loss of revenues for ASG, and the task force estimates those losses to begin from $400,000 the first year and rising up to $3 million in 2022.
The 5% excise tax on all imports of commercial value would also be repealed gradually, beginning in 2019, when it will drop to 3%, 2 percent in 2020, 1% in 2021 and by 2022 there will be no more excise tax on miscellaneous goods.
The loss of revenue from that move ranges from $2.5 million in 2019 to $7.2 million in 2022.
All of the revenue measures with the exception of the payroll deductions which can be done administratively, and the limited liability company bill which was introduced in the last session, are to be introduced in the Fono session which begins today.
