Bold and essential ... IMF approves Budget and tax plan
The International Monetary Fund (IMF) has approved the government’s budget and plan to raise the personal income tax threshold from $592,800 to $1 million come July 1.
The Opposition has criticised the budget, labelling it as a sham saying the numbers are not adding up.
But, according to the IMF’s Mission Chief, Dr Uma Ramakrishnan, the Budget is consistent with the Fund's agreement with the government.
Referring to the government’s decision to increase the personal income tax threshold, Ramakrishnan said the plan is a bold step to rebalance the tax system towards indirect taxation.
She says the shift from direct to indirect taxes will reduce the marginal and average tax rates for the majority of those who pay income tax, improve work incentives, and encourage workers and employers to move into the formal economy.
In relation to the $13 billion tax package, the IMF said it was "bold and essential".
Asked if the Budget, as presented, was within the expectations of what the IMF envisaged, Ramakrishnan said the current Budget has been crafted in the context of the relaxation of the primary surplus target to 7.25 per cent of the gross domestic product.