Sun. Dec 8th, 2019

Social Security tax increase to cover $50 monthly COLA for retirees

The monthly fifty dollar ($50) supplemental benefit payment for all social security retirees will no longer be appropriated in the Fiscal Budget 2018 of the National Government and instead the payment will be sourced through an increase in social security payments. [restrict]

According to Senator Rukebai Inabo, for FY2018, shortage in local revenues has made it necessary to exclude the $2Million funding necessary to continue the appropriation for the $50 benefit payment to SS beneficiaries.

The funding necessary to continue this supplemental benefit payment will be provided with an increase to SS tax.

Inabo said with this new amendment in the FY2018, employees and employers will now pay 7 percent from the six percent currently imposed and with removal of the maximum remuneration, all salaries and wages will now be subject to SS tax.

She explained that currently the maximum remuneration subject to SS tax is $6,000 per quarter or $24,000 per year so SS tax per year would be 6 percent of up to $24,000 of salaries & wages.

“When the FY2018 Budget bill is signed into law, there will not be any maximum remuneration so all wages will be subject to 7% SS tax.  And the Employer will match the same amount and remit to the SS Administration,” Inabo stated.

She said the additional SS tax will further burden the already struggling Palau population.

“Amendments would be taking from people currently working and from their employers same matching amount and use it to finance the $2Million appropriation for the $50 SS supplemental COLA benefit,” she said.

“We would be taking from the already struggling young families and using that money to give to the retirees.  The amount to be taken from each employee might be small but the weight of its impact is heavy,” Inabo said.

This new tax will be added to the new rates that the population will have to pay for.

“ This add-on looks small in amount; but the weight feels very heavy to already struggling family trying to make ends meet,” she said.

She said more public hearings should have been conducted to ensure that there the SS tax rate structure can be reviewed to ensure determined best SS tax rate to finance the $50 COLA without  raising the SS tax.

The budget bill however is now before President Remengesau for signature. (B. Carreon) [/restrict]