ILO warns Vanuatu tax reforms could hurt vulnerable

The International Labour Organisation is warning the Vanuatu government that its proposed tax reforms could hurt already vulnerable workers and their families.

There's already widespread opposition in Vanuatu for the new tax plan which aims to introduce among other things income tax and corporate tax by July next year.

RNZI reports the ILO's regional wage expert Daniel Kostzer said a recently released review of the proposed tax plan shows government had done a lot more consultations on the proposed reforms but it had failed to take most of the concerns raised into consideration.

Mr Kostzer said one of the biggest concerns was that the flat rates being proposed for income tax do not discriminate between single workers or workers with families.

He said this was unfair when compared to the corporate tax the government was proposing.

"Because the businesses they are taxed on the profits. That means that after they spend the money."

"In the case of the wages the income tax is going to tax them before they start to spend the money. Independent of what they are going to do with the money so we think that is a very unfair situation for workers."

Daniel Kostzer said another concern was that the government's plan was based on data from before 2015 but he said the widespread destruction wrought by category five Cyclone Pam in March that year completely changed the economic landscape in Vanuatu.

Photo file: Vanuatu Parliament House