Tax rejection blocks Free Trade [1]
Thursday, July 1, 1999 - 11:00. Updated on Wednesday, January 6, 2016 - 13:49.
From Matangi Tonga Magazine Vol. 14, no. 3, July 1999.
The concept of Free Trade according to ‘Aisake Eke, Tonga’s Chief Accountant and the Secretary for Finance, is based on a belief, “that Free Trade will bring about economic growth, because of a bigger market”.
‘Aisake said that Free Trade is the backbone of the new World Economic Order, and Tonga had made a move to be part of this Global Economy. He said that Tonga had applied to be a member of the World Trade Organisation and it had also agreed in principal to the proposed Free Trade Area for the Pacific Region, which would be confirmed and implemented at the coming Forum Conference to be held at Palau in October.
Despite this move by government, ‘Aisake said there was still muchwork to be done in order for Tonga to take advantage of its membership. Some fundamental changes had to be made, including the introduction of the Harmonised Custom Tariff, the moving away from direct taxation to indirect taxation, and widening of Sales Tax to include services.
“Last year (1998) the Ministry introduced the Harmonised Custom Tariff, which is simply a reclassification of imported goods. We also proposed for a reduction in the duty on fuel by 50 per cent to be compensated with the widening of the Sales Tax, but it was rejected by the House.” ‘Aisake said that these set backs, may mean that instead of a gradual change there will be a sudden change in order for Tonga to take advantage of Free Trade. Despite these set backs ‘Aisake said his ministry would re-introduce the Harmonised Custom Tariff into the House this year.