The proposal calls for a spending ceiling of $54.2 million, of which $36 million is derived from locally generated funds with the remaining $18.25 to come from Compact assistance, including the Compact Trust Fund.
Toribiong also proposed to increase anew hotel room tax from 10 to 15 percent, collect departure tax of $20 from Palauan citizens, increase import tax on foodstuffs, additional tax on divers and raise taxes collected from employees earning $25,000 or more a year.
The president said these will translate to about $2 million in revenues.
These revenue generating measures have been proposed in the previous FY2010 supplemental budget. The effort of the president however was defeated by members of the Olbiil Era Kelulau.
“The budget I am submitting is a balanced, if not slightly surplus, budget. It is a budget based not on whimsy or caprice or on unreasonable and unachievable revenue projections. The revenue projections for Fiscal Year 2011 are precise and based on the best information available,”President Toribiong explained in the transmittal letter to Senate President Mlib Tmetuchl and House Speaker Noah Idechong.
The proposal calls for a spending ceiling of $54.2 million, of which $36 million is derived from locally generated funds with the remaining $18.25 to come from Compact assistance, including the Compact Trust Fund.
The proposed budget also recommends a 10 percent reduction in salary for the President, the Vice President, Ministers and the 29 members of the Olbiil Era Kelulau.
The President says the salary cut will save the government $195,500.
In the FY2010 supplemental budget, the salaries of the president, vice president and ministers were raised. The combined pay hike is over $100,000.
“…They are intended to impact as little as possible on those citizens and residents at the lower rung of the economic ladder…” while generating the needed additional money,” he said.
Toribiong also reiterated his call for OEK to pass the administration-backed Foreign Investment Act in order to improve Palau’s foreign investment climate.
The president also warned the lawmakers that he will not sign a budget that contains unrealistic projections of local revenues.
“The custom of increasing local revenue projections to permit the budget to appear balanced is, at best, a faithless practice and something that I intend to end. This procedure has resulted in the budget deficits that Palau has faced over the years and which I inherited when I came into office,” he said.
The president also pressed anew in his proposed budget to earmark $1.5 million in assistance for low-income families as identified by the 2009 household income survey. The source for that funding will be identified later.
