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Consumption Tax, an income tax in disguise

Nuku'alofa, Tonga


The Ministry of Finance is charging consumption tax on rental buildings. Don’t they know that providing a service is peculiar to humans only? Buildings cannot provide a service (cf. a mechanic, doctor)so should be exempt from consumption tax. This consumption tax is really an income tax in diguise, which will certainly increase the rate of inflation, discouraging businesses (new and old) from operating.

As an example, a shopkeeper is charged 15% by the landlord, which the shopkeeper has to pass on to his customers who are already paying 15% for his goods. The people, as usual, have to bear the cost for all this. The government is capitalising on the fact that millions of dollars are being sent back from Tongans overseas. But what about the people who don’t get money from relatives overseas?

What the government should do is remove the consumpton tax for rental buildings and reduce the consumption tax to 10% as was done in NZ when it was first introduced.

The government needs to encourage the formation of new businesses, and protect local manufacturers instead of relying so much on imported goods, which further devalue our dollar. They should realise by now that devaluing our currency has not increased exports, and should work towards strengthening our dollar as we import most of our goods from overseas.

Yours Sincerely

Sifa Taumoepeau