Friday, July 02, 2010

New Revenue Measures in Revised 2010 Bloated Budget

Fiji Broadcasting Corporation - Friday, July 02, 2010

New revenue measures, reducing expenditure, policies to stimulate import substitution and local business, and a call to increase exports while being prudent with our finances feature in the 2010 revised budget announced today by Prime Minister Commodore Voreqe Bainimarama. 

Bainimarama gave this overview of the changes that will occur: 

“Taking into account the revenue measures and expenditure cuts, the 2010 Revised Budget framework estimates total revenue at $1.496 billion and a total estimated expenditure of $1.715 billion. 

The original 2010 Budget framework estimated a revenue of $1.486 billion and a total expenditure of $1.790 billion. The Revised Budget projects operating expenditure at $1.283 billion and capital expenditure at $385 million, of which $32.0 million accounts for foreign financed projects.

The estimated net deficit is $218.0 million or 3.5 per cent of the nominal GDP at $6.188 billion. 

In this Revised Budget, Government will reduce expenditure by about $75 million in total, comprising of a 44 million dollar reduction in operating expenditure and a $24 million dollar reduction in capital expenditure whilst 7 million dollars is the reduction in the VAT component.” 

Bainimarama says the budget would act on the true position of government finances as accounting standards adopted by previous governments have not been compliant with international best practice. 

He says government would focus on the resource based sector, particularly agriculture and pointed to the recently enacted Land Use Decree. 

On the new revenue measures to be taken, Bainimarama announced the implementation of the following: 

“To further encourage listing of companies on the South Pacific Stock Exchange (SPSE) and position Fiji as a regional financial centre, the distribution of dividend from listed companies to shareholders will be treated as deemed tax paid. This incentive is in addition to the recently announced reduced corporate tax rate of 20 percent for listed companies.

To augment the VAT net, the 12.5 percent VAT will be levied on General Insurance with the exception of Medical, Term Life and Workers Compensation. The imposition of VAT on general insurance is consistent with practices in jurisdictions such as Australia and New Zealand.

To assist low and middle income earners in purchasing new fuel efficient motor vehicles, the fiscal duty on new motor cars and other passenger vehicles with capacity not exceeding 1500cc will be reduced from 32 percent to 15 percent. 

The age limit for used or reconditioned motor vehicles imports will be reduced from 8 to 5 years. 

These measures will also assist in reducing fossil fuel imports and minimize pollution.

To improve quality and safety of public service transport, the fiscal duty on new buses for the transport of 23 persons or more will be reduced from 32 percent to 5 percent and import excise reduced from 15 percent to 5 percent - a total of 10 percent. I encourage all bus proprietors to take advantage of this reduction as soon as possible. 

To encourage local production of vegetables, the duty on all imported fresh vegetables currently under the 5 percent duty band will be increased to 15 percent. 

To assist companies engaged in the processing of peas, the fiscal duty on shelled peas will be reduced from 5 percent to 0 percent. As you are aware, split peas, rice and tin fish were zero rated following world commodity and food price increases. These ratings will be maintained to assist low income earners. 

The Airport departure tax will be increased from $75 to $100.” 

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