Included in the legislative package that the administration has sent to the Fono are amendments to income tax laws and business licensing regulations.
One bill would close a loophole which the administration believes is the reason why so many businesses are getting away with not filing and paying their taxes.
The existing licensing statute has language to the that effect that applicants for business licenses must pay all fees and debts except taxes owing the government, before a license may be issued.
The proposed change deletes the phrase except taxes from existing statute.
Governor Lolo Moliga explains in his letter about the proposed bills to the Fono leaders, “at present, and this is too often the case, business tax returns go un-filed or filed and unpaid with no satisfactory payment plan in place.”
He believes deleting the taxes exception would enhance Tax Office compliance and their ability to go after business income taxes.
The administration is also proposing a reduction in the maximum corporate tax rate for companies earning more than $650,000 a year.
The current corporate tax rate is 44%, but the administration wants to reduce the rate to 34%.
Governor Lolo reasons that the lower rate will bring the territory more in line with US rates and believes the reduction can spur additional private investment and business growth in the Territory.
Another change that’s coming from the government is the deduction per individual taxpayer for contributions to retirement savings plans such as an individual IRA plan.
Under the proposed amendment, the gross income deduction for retirement will be increased from $2,000 to $5,500 and to $6,500 for taxpayers over the age of 50.
Lolo said, “We think it’s important to encourage businesses and individuals to consider increasing their saving to supplement future retirement incomes. This is sound financial planning that can contribute to a more secure future for our families.”
