Sens. Surangel Whipps Jr and Raynold Oilouch in a letter to Sen. Joel Toribiong, vice chair of the Senate Committee on Ways and Means in their comments on the 2010 supplemental budget stated that it is mostly against the proposed increases in taxes contained in President Johnson Toribiong’s supplemental budget.
The president is asking the Olbiil Era Kelulau an additional sum of $3,613,000 to supplement the general operations of the national government.
In the supplemental budget the president included a proposed increase in hotel room tax from the current ten percent to 15 percent.
A scuba diving tax of $5 per dive for divers was included in the proposed taxes in the supplemental budget.
The two senators said that although the concept of taxing tourists is good, they are discouraging it in the form of hotel room tax and scuba diving fee.
The senators is also against a proposed increase in the departure tax paid by Palauans from $10 to $20, instead is proposing the passage of the measure which will impose a fee of $100 for a tourist visa.
This measure, will eliminate the departure tax and green fee collection at the airport but still generate an additional $3 to $4 million annually, more than what is being collected under the statute.
The president also recommended that every April of the year, each non-Palauan workers, or foreigners residing in Palau register and pay $25 each for the annual alien registration.
The senators supports this increase and suggested that it be increased to $100 which will translate to $600,000 in revenues.
The senators supports an additional four percent tax imposed on employees earning over $25,000 a year.
This provision however will only be imposed for a year. Currently employees collecting salaries ranging from $8,000 and above yearly pay a 12 percent tax.
The senators also discouraged the implementation of import tax on food and medicine because it will affect lowest wage earners.
Rather, the senators said there should be in increase in minimum wage and cost of living allowance to government employees as stated in separate proposed bills.
Foodstuffs are alcohol beverages, beer, liquor, wine and carbonated drinks.
The present law imposes a 25 percent tax on alcoholic beverages while three percent import tax on carbonated drinks.
The government is seeking additional money for its operation to fund its government operation.
The supplemental budget will cover to meet operating requirements obligations such as water and sewer system bills.
In the same letter, the senators said that a review of the financial documents from the Finance Ministry showed that the local revenues collected in the first quarter were only 23 percent of the projections and based on this figure there is a possibility of an eight percent shortfall in local revenues.
The two said this will mean a $2 million shortfall.
Whipps and Oilouch also want answers to the status of the Compact of Free Association Trust Fund.
The two senators also liked to see what actions have the Executive Branch has taken to reduce cost.
Whipps and Oilouch said there are inconsistencies in the Executive Branch’s policies of belt tightening when there was an increase in hiring, an increase in per diem rates and anticipated increase in salaries of president, vice president and ministers.
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