Samoa’s Minister of Finance Sili Epa Tuioti is confident his government’s continuing reform agenda “will provide the solid foundation for a resilient economy and to ensure the Samoan community receives the service they demand”.
The Minister was presenting the government budget for the 2017/2018 financial year in Parliament yesterday.
The budget totals $ST934.2 million. Local revenues would bring in $ST614.9 million while $ST237.4 would come from external grants.
A deficit of -$ST81.9m would be financed by Soft Term Financing -$ST90.3m and Credit Budget Support- $12.9m.
The budget would have a Cash Surplus after borrowing of $ST21.3m.
He said that government’s financial priority will continue to be given in the areas of education and health.
The total budget allocation for Education is approximately $ST100.3 million and is equivalent to 19.6% of total government expenditure programs for the financial year 2017/18.
$ST 88.5 million or 17.3% of the total expenditures for the new financial year has been allocated to the Health Sector.
As government spending increases annually, efforts have also been made to increase revenues.
The minister told parliament that, “In line with the Budget theme, the Government is supporting the Revenue Review Recommendations in current taxation arrangements designed to ease the income tax burden on lower paid employees as well as lowering export taxes, duty and excise taxes to support exporting industries.”
The assistance package will see the marginal tax rates adjusted by raising the tax free threshold from the current level of $12,000 to $15,000.
This would see an extra 1,852 employees no longer required to pay income tax, saving them up to $ST300 per year.
It would also mean an estimated 14,199 workers in formal employment would not be required to pay income tax.
Salary levels of $15,001 and $25,000 will be taxed at 20% and those over $25,000 at 27%.
The Minister also said that in order to support the drive to expand exports, businesses that export goods and services, (excluding re-exports), get a tax deduction equal to 50% of the profits made on those exports.
This effectively halves the tax otherwise payable on those profits. The deduction would only be permitted where the CEO Ministry for Revenue is satisfied that the export sale proceeds will be remitted back to Samoa.
“It is the Government’s belief that the two offsetting measures will trigger increased economic activity which in turn raise commercial activity and eventually raise tax collection,” said the Minister.
Sili called for the country to work together to improve Samoa’s financial situation.
He said, “This is not an agenda for the government alone. It calls for the contribution of the community as well. It is a partnership and for that, I would like to invite the community to actively participate in the development of our country in whatever capacity and role.”
