20 Sep 2006

Niue plans tax reform next year

4:02 pm on 20 September 2006

Niue is planning to make sweeping changes to its tax system next year.

Plans include a consumption tax to make up for lower levels of income tax and import tariffs.

Don Wiseman reports.

"Niue needs to comply with the requirements of the Pacific Islands Countries Trade Agreement or PICTA which calls for the gradual removal of tariffs, though almost all of Niue's imports are from New Zealand. New Zealand is likely at some stage to enter the PICTA agreement and at this point Niue's income would be seriously affected."

The Niue Tax Reform Review also points out that the current tax base is too narrow and has little scope for expansion. It proposes that Niue's very high income taxes - 50 percent on incomes over 35,000 dollars - be slashed to 20 percent above 10,000 and 30 percent from 20,000 and over. The Niue Consumption Tax, or NCT, would be applied to a broad range of goods and services at a low level. Tariffs on imports will be reduced, but excise tax would still apply to luxury item such as alcohol. While the plan has not been made public it has been endorsed by Cabinet and is slotted to become law next year.