Tonga heading for trouble, warns Cabinet minister [1]
Monday, March 20, 2000 - 11:00. Updated on Tuesday, January 26, 2016 - 12:12.
From Matangi Tonga Magazine Vol. 15, no. 1, March 2000.
The Tongan government is heading towards serious financial problems and new sources of revenue have to be found soon, the Minister of Police Clive Edwards warned.
He said a lack of funds was the main obstacle to improvement in the work of the police, and the administering of justice
“And if we do not start on something soon, we will be in a serious financial problem, and we are already heading in that direction, where Treasury is not able to find sufficient funds to meet the budget requirements of the ministries.”
Clive proposed two ways to increase government revenues, which were for government to introduce a new Corporate Tax and to revive Tonga’s Off Shore Banking System.
“If Tonga reduced Corporate Tax to say 10 seniti [in the pa’anga], that will be a loss of about $4 million immediately, but the benefit from that would be to have companies with head offices registered here. They are dealing in billion of dollars of turnover, and [tax revenue from them] will soon make up the $4 million that we lost, but we will probably gain $500 million from that or even more,” he said.
“If we don’t make some changes along that line where we can attract companies, because Tonga is ideal at the moment for that type of set up because politically we are very stable.
“Fiji can do that, but politically, economically, there’s a big question mark, same as the Cook Islands, same as Samoa. Big businesses want to know if their businesses will be safe being run from those countries.
“If we do that and revamp our Off-shore Banking System and up-date it to work more effectively we would have enough revenue coming from those two areas for Tonga to be financially independent. While we are grateful for some of the foreign aid that we’ve had, we will not have to rely too heavily on aid, and I think it is a good thing to be independent.”