Relief coming to lower earners
Legislation paving the way for new payroll tax bands aimed at providing relief to lower earners was passed by MPs in the House of Assembly on Friday night.
However, Bob Richards, the Minister of Finance, told Parliamentarians that the implementation of the employees’ portion of the proposed reform would be delayed until July 1. Under the proposals, people earning $48,000 or less will see the tax rate fall from 6 per cent to 4.25 by 2018-19 and those paid between $48,000 and $96,000 will see their tax rate cut from 6 per cent to 5.5. But those earning between $96,000 and $235,000 can expect to see their payroll tax rate jump by a half, from 6 per cent to 9 by 2018-19.
Mr Richards’s announcement that a portion of the reform would be postponed came before the Payroll Tax Amendment Act 2017 was debated by MPs and prompted a sharp rebuke from Opposition leader David Burt. And while the legislation was approved by Parliamentarians Mr Burt, the Shadow Minister of Finance, branded Mr Richards’s payroll tax reform package “badly thought out”.
Promising the Progressive Labour Party would implement “comprehensive tax reform” he added: “The Government is now being forced to delay something else because of the difficulty of implementing it by employers.”
Responding to questions, Mr Richards said the delay would cost the Government around $820,000 in lost revenue, but said he would not return to the House to have the implementation of the fee structure set back again.
“This is a one-time concession in terms of time,” he said. “The Government is not in a position to push this down the track any further.”
In his budget address, Mr Richards announced that lower-paid workers will get payroll tax cuts over two years, while big earners will be forced to dig deeper into their pockets.
Under the proposals, the cap rate for tax for the highest earners, the maximum taxable salary level, will be increased from $750,000 to $900,000.
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