Kaya
Selby, RNZ Pacific Journalist
A Cook
Islands MP is accusing the government of taxing low-wage
earners more by not adjusting the tax-free threshold with a
minimum
wage increase.
The changes came
into effect on 1 July, pushing the minimum wage up
slightly from NZ$9.50 to $10 (around US$6).
In
Rarotonga, the tax system includes a zero percent threshold
of up to $16,500 earned income per year. Now, more income
sits above that threshold.
Opposition leader Teariki
Heather told RNZ Pacific this could harm the people the
minimum wage policy is supposed to help.
“You can’t
increase the threshold when the minimum wage increases,
because then the government doesn’t get any benefit from it,
no tax,” he said.
Responding to a question about the
tax threshold in Parliament, Prime Minister Mark Brown said
he would look into it.
Local media has reported that
Brown told parliament on 25 July that it was never his
intention to increase the tax burden for workers.
“It
should always be below so if it needs to increase the tax
free threshold, then that is something that we need to
do,”
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More than two weeks later, there is yet to be an
announcement on threshold changes.
Heather said that
the minimum wage increase is not enough, given the
fast-rising cost of living increase on the
islands.
“There’s not enough money to go around… and
I still believe the minimum wage is too low.
“It
should be at $12 to $12.50, most private businesses actually
say more than that than that, around $15. Across the board,
it still won’t benefit the families. Everything now has
increased.”
Businesses happy
Cook Islands
Chamber of Commerce director Steve Anderson told RNZ Pacific
that businesses are happy with the changes, given most of
them pay above the minimum wage as it is.
“Only 2.5
percent of these private sector employees earn the current
$9.50 per hour minimum wage, with 52 percent earning above
$12.5 per hour, indicating many businesses already pay
competitive wages.”
“A ‘little and often’ approach is
seen as achieving incremental gains for employees. This
avoids unnecessary inflationary pressures, or a drain on the
tax-take (noting that most minimum wage earners are public
servants),”
Anderson said he has been assured by the
government that the tax-free threshold will be increased
soon.
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