Letter to the Editor on ANZ “gift” to Cyclone Relief Fund. 9 Feb. 2013
Letter to the Editor (sent to The Fiji Times and Fiji Sun, 8 February 2013)
I notice from media reports that the Prime Minister’s Relief Fund received $50,000 from the ANZ Bank to assist in Cyclone relief and that Commodore Bainimarama stated he would “like to thank ANZ for this very wonderful gift”.
Exactly, how altruistic is this gift by ANZ?
In the 2012 budget, Minister of Finance Bainimarama reduced corporate taxes from 30% to 20% and also income tax at the upper end from 30% to 20%.
There was absolutely no need for this given that Fiji’s taxation rates are already at the lower end in the region.
ANZ, which makes just over $40 million after-tax profit in Fiji annually, therefore received two real long-lasting “gifts” from tax-payers, courtesy of Commodore Bainimarama.
The first is an increase in their after-tax profits by some 14% annually, or more than $6,000,000 this year, continuing indefinitely into the future ($60 millions over ten years).
The second wonderful gift is that by reducing income taxes at the upper end from 30% to 20%, the upper income people at ANZ have also been given a salary increase of 14%, and ANZ will not have to increase salaries for the next five years (while their revenues will keep increasing as normal).
ANZ’s profits will therefore be that much higher into the future, depending on how many people they have in the 30% tax bracket and the salaries they were earning.
Taxpayers must not forget the third “gift” that ANZ gave them a couple of years ago when they led Khaiyum and Ministry of Finance officials people on an international road show, resulting in Fiji selling $500 millions worth of bonds paying 9% interest when World Bank was willing to lend the same amount to Fiji at 3% interest.
Tax-payers now totally unnecessarily pay $30 millions per year extra in interest, for as long as those bonds are unredeemed.
All corporate tax-payers and upper income brackets in Fiji will be enjoying these benefits at the expense of middle and lower income tax-payers who will have to pay more.
These extra burdens will fall on tax-payers ultimately, but squeezed in-between will be FRCA who will have the additional unnecessary burden to replace the lost revenues .
Economists complain when countries enjoy economic growth while income distribution worsens.
The Bainimarama /Khaiyum reign in Fiji will be remembered as the one where the economy did not grow for five years, while income distribution worsened because the government deliberately transferred the burden of taxation from the rich to the poor and middle classes.
Had the Minister of Finance not brought in these totally un-necessary tax changes, the Fiji Government revenues would have an extra $90 million (and more) annually to devote to cyclone relief and other welfare issues. They would not need “wonderful gifts” of a mere $50,000 from ANZ or anyone else.
Whenever corporate entities in Fiji give “generous gifts” to the Bainimarama Government efforts, keep in mind the arithmetic of the real tax-payers’ gifts in the 2012 Budget to these corporate giants via the unelected Minister of Finance.
Professor Wadan Narsey
8 February 2013.