Penrhyn Island, Cook Islands. Photo: Cook Islands Tourism Corporation
Critics of a new tax bill in the Cook Islands' say low wage earners will see little benefit from the law change.
The Income Tax Amendment Bill 2023, which was passed in Parliament on April 15, will mean people living in the Pa Enua (outer islands) for 182 days or more will not have to pay tax on the first $60,000 they earn, once the change comes into force.
The bill has been controversial since it was first announced as a policy less than a week before last year's general election.
One political party called it a "last-minute" grab for votes, while another filled an election petition after the polls, accusing the government of bribing voters.
The petition was dismissed in court and judge ruled that all parties were "jockeying for votes".
Prime Minister Mark Brown told MPs the amendment would result in $1.2 million returning to the pockets of workers.
"There is an uneven playing field when it comes to Rarotonga and the Pa Enua. This bill goes some way toward levelling that playing field," Brown said.
"We think that things here on Rarotonga cost a lot of money, but when you go to the outer islands everything costs more than what it is here."
But opposition parties say there were better ways to support the Pa Enua.
Democratic Party leader Tina Browne believes the policy would not to be effective.
"If you are [earning] $15,000, you actually get $1.31 more. If you are [earning] $20,000, you have $17.65 per week more, and there is more and more as you go up the scale," Browne said.
"So the people that are really needing the money are not going to get the money," she said.
Browne, who represents the Papa Enua atoll of Rakahanga, questioned a claim made by the prime minister that 1,500 people would reap the rewards of the tax cut.
She said only five people - including herself - from her island that has a population of around 80 people would benefit.
The opposition leader said parliamentarians were set to benefit the most.
"Those members of parliament in the outer islands who qualify, you would be saving and taking away more than $10,000 per annum."
'Great news for people'
Chamber of Commerce chair Rebecca Tavioni told RNZ Pacific she was "uncertain" how many people would get extra money.
"It is not really clear who will benefit and by how much," she said.
"In the Pa Enua, currently most of the workers there already work within the tax-free threshold [under $14,600]."
However, Penrhyn Island's executive officer Puna Vano from the northern group is all for it.
"It is great news for our people here," he said.
"I know there are some that argue the point [that] not many people earn up to $59,000, but in my opinion any tax cut will be a big help."
Penrhyn has a population of around 90 people and Vano said life was hard.
A return flight Penrhyn-Rarotonga-Penrhyn costs $3,600 and a 25 kilogram bag of rice is about $80.
Vano hopes the tax cut would result in more people returning to the depleting populations of the outer islands.
"This will attract more workers working in Rarotonga to return to the outer islands [and] will help boost the economic activity in the outer islands."
Chamber boss Tavioni said the two major roadblocks for business owners in the Pa Enua were labour shortages and high freight costs.
So anything that made life easier in the outer islands was a good thing, she said.
"[Legislations and policies] that brings any returning residents to the Pa Enua and also anything that promotes new business within the Pa Enua is welcomed."
She said people not having to pay tax if they are earning below $60,000 "on face value is a really great incentive."
