Staff reporters
INCREASES in the defence levy for the first six months of 1999 were narrowly passed by the House plenum yesterday, while deputies also voted to keep the price of petrol artificially high.
In the last House session before the Christmas break, the 1998 law on defence tax was modified to lessen the burden on pensioners and low earners but increase the cost for those with supplementary sources of income.
In accordance with an Akel proposal, pensioners will only be taxed on what they make above £3,000 per year, as opposed to the previous £1,750. Deputies threw out an Akel proposal for scaled contributions, but in another effort to help low earners the entire amount paid by anyone making up to £2,500 a year will be returned to them as rebates.
The defence levy, which in August was upped by half from two to three per cent, was yesterday further raised to four per cent for certain individuals and organisations. Those receiving dividends and interest on loans now pay the higher charge.
Also liable are landlords who will pay four per cent on 75 per cent of the rent they receive, companies which will pay four per cent on profits and organisations which will pay four per cent on their total income.
After lengthy and heated debate, voting on the contentious bill was put off for almost an hour and a half to give deputies time to mull over the options while other, less controversial amendments were considered. The bill was eventually passed by 25 votes to 24.
The government had initially wanted the bill passed for a year, but had to accept a compromise six-month increase, after which the levy will again come up for review.
Despite falling international petrol prices, the House also voted that the retail price of fuel should remain the same. The government has excused this stance by saying that the extra £45 million a year netted from the artificially high pump prices is returned to consumers in the form of electricity bill rebates. A lot of this money also goes to the Defence Fund, helping keep the defence levy down, the government argues.
Opposition party Akel claim the artificially high pump prices amount to a “secret” tax on consumers. The price of crude oil has dropped from $26 a barrel in 1996 to about $10 a barrel now.
The deputies then rounded off the evening with the traditional knees-up Christmas party.
