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Parliament passes $60k tax free threshold for Pa Enua

Saturday 15 April 2023 | Written by Matthew Littlewood | Published in National, Outer Islands, Politics


Parliament passes $60k tax free threshold for Pa Enua
Cook Islands United Party leader Teariki Heather. Photo: FILE/16061917

People living in the Pa Enua won’t be paying tax unless they earn over $60,000 a year, thanks to the passing of a new Bill.

On Friday in Parliament, the Income Tax Amendment Bill 2023, had its second and final readings. It formalised a Cook Islands Party election pledge during the August 2022 election campaign.

It has not been without controversy, with the Cook Islands United Party taking it to Court in a petition which accused the policy as being tantamount to bribery. The petition failed.

On Friday, Cook Islands United Party leader Teariki Heather said his party continued to oppose the Bill.

“I don’t see any benefits for the Pa Enua,” Heather said.

“This pledge was something that was thought up urgently with little forethought. It all happened before the August 2022 general election.”

Heather said the Bill would “divide the Cook Islands”, and there were other measures that the Government could implement that could improve people’s welfare in the Pa Enua.

This could include subsidies on freight, subsidies on airfares and increasing the wages of people who live in the Pa Enua.

Heather said the Government could also spend more on improving infrastructure in the Pa Enua in order to encourage people to live there.

Atiu MP and Health Minister Rose Toki-Brown told Parliament she was pleased the Bill had arrived, particularly considering the long time it had spent in the Courts.

“Our people will see benefit from this, I do think this will be an incentive to bring people back from overseas and to Atiu,” Toki-Brown said.

In the Pa Enua, the tax rate will be set at 27 cents to the dollar for those earning $60,000 to $80,000 and 30 cents to the dollar for earnings over $80,000.

According to the Bill’s explanatory note, the Bill “amends the Act to provided targeted economic stimulus and financial support living in the Pa Enua by increasing the standard supplemental deduction for those individuals”.

On Thursday, opposition leader Tina Browne said the Bill would prove a “field day for lawyers”, particularly the definition of what constitutes a resident of the Pa Enua.

According to the Bill, you have to live in the Pa Enua for at least 182 days in a year to qualify.

On Friday, Cook Islands Party MP and Infrastructure Minister Albert Nicholas said – in response to Browne’s concerns – that there were “possibly” technical issues with the Bill, but these could be changed as it was a “living document”.

Nicholas said the Bill would benefit people in the Pa Enua by ensuring more money was kept in their pocket.

“This Bill demonstrates the Government’s commitment to its promises,” Nicholas said.

Deputy Prime Minister Robert Tapaitau said he was “disappointed” with the opposition to the Bill.

“Everyone in the Pa Enua would benefit from this Bill,” Tapaitau said.

“Common sense should prevail.”

The Bill was passed by the 12 Cook Islands Party MPs and the three independent MPs, and the One Cook Islands Party MP Toanui Isamaela. It was opposed by the five Cook Islands Democratic Party MPs, and the three Cook Islands United Party MPs.