Today’s questions: 1. Will your party commit to a review of the tax brackets if elected? 2. Does your party support the removal of tax on all Cook Islands pensions? 3. Does your party think returning Cook Islanders should have their superannuation or pension funds taxed?
One Cook Islands
1. We will review the tax brackets for Cook Islands workers. The first stage is to lift the tax-free threshold for Cook Islands workers from $11,000 to $30,000.
2. We are committed to removing tax on all pensioners that live in the Cook Islands.
3. Returning Cook Islanders should be welcome to return and live at home and their pension and super should be tax-free as they will contribute to VAT tax the minute they spend their money.
Cook Islands Party
1. The Cook Islands Party was responsible for the tax reforms initiated in 2013 that resulted in a reduction of income tax rates for individuals and a shift of the tax burden to consumption tax (VAT). This meant that our increasing numbers of visitors would share in their contribution to our tax take through consumption (VAT shift from 12.5% to 15%).
In addition, our government initiated a reduction in the income tax rate for the benefit of low-income earners. From January 1 this year the lowest tax rate was reduced further to 17%, putting more money in people’s pockets.
Subsequent to this our government instituted a tax amnesty that has resulted in close to $14million being paid in by taxpayers who are taking advantage of the opportunity to clear outstanding taxes without penalty. As we can see, the Cook Islands Party government has consistently been reviewing taxes on an annual basis.
2. First, may we correct a misconstrued public opinion – there is NO tax on pensions or a tax on old people. The tax laws apply to income – not age or income source. The tax laws of the country are very clear in that you do not pay any tax until you start to earn over $11,000 per annum, then income tax applies on your income.
The government-paid old-age pension is part of your taxable income as it is in most countries. If you only earn the old-age pension then you do not pay tax because you will fall under the tax-free threshold. If you collect the pension and earn other income from a job or other revenue, then your total income is taxed at the appropriate rate. For example, this means that for any MP who is over 60 and collects the pension, their salary will be taxed on the combined value of their income at the tax bracket they are in. Making the pension non-taxable will only benefit those who collect two incomes and will not increase the income for those that rely solely on the pension. It will give higher income earners more money while providing pensioners with no extra income – the Cook Islands Party does not agree with this.
The New Zealand pension is taxed in New Zealand. Those that collect the NZ pension in the Cook Islands can choose to have their pension taxed by New Zealand or taxed by the Cook Islands. Many have chosen to pay tax in the Cook Islands because our tax rate is lower and the NZ pensioners collect more money under the Cook Islands tax rates.
3. The Cook Islands Party is of the view that everyone who chooses to live in our country should abide by the tax laws of our country. We have a tax law that applies to all people that live in our country – there are no special categories of people who are exempt from paying tax. Our point made in answer to the question above applies here as illustration.
1. Yes. It is the belief of the Democratic Party that Cook Islanders and Cook Island businesses want two things from their government – predictability and policy coherence. The Democratic government will ensure that the rules are clear, the playing field is level, and decision-making is transparent. We will look at a review of the tax brackets to examine ways to put more into the pockets of Cook Islanders, especially those that struggle with the cost of living.
2. Yes, we do support the removal of tax on all Cook Islands pensions.
3. No – these pensions have been taxed at the source so why would we double-tax the rewards of the work of our people, especially when earned in another country? We want to raise our elderly and older persons up and ease their financial burden, not make it even harder for them to make ends meet. Our aim is a fair, practical system of taxation that provides for the country without overburdening the individual – none more so than older Cook Islanders who have worked hard all their lives.