Sudden move to close bond warehouses, angers importers [1]
Friday, October 27, 2006 - 18:14. Updated on Sunday, November 2, 2014 - 18:24.
A sudden proposal by the Prime Minister and the Chief Commissioner for Revenue for government to close down the 20 bonded warehouses in Tonga by 31 March 2007 has angered Tonga's importers and undermined the confidence of investors.
Some bonded warehouse owners say they might have to abandon their businesses and leave the country.
All of Tonga's 20 importers have bonded warehouses and, frustrated after meeting with the Prime Minister and Customs officials and their taskforce over the last fortnight, many of them attended a meeting in Ma'ufanga on Wednesday to organise their opposition to the new Customs Bills that put an end to bonded warehousing.
If the House will not be able to pass the income Tax Bill 2006 and the Customs Bills this year, there is a possibility that the Privy Council may steam-roll the bills into law after the house closes next month. The Privy Council has the authority to implement the bills, and then table them into the House later when it opens for its 2007 session next May.
The Customs Bills are collectively the Customs and Excise Management Bill 2006, the Customs Bill 2006 and the Excise Tax Bill 2006.
Abuse
A spokesperson from the Customs Department said today that the proposed closure of bonded warehouses was based on findings that they were vulnerable for abuse and had been misused.
The concept of bonded warehousing, whereby an importer would remove goods from the wharf and store them in a bonded warehouse that is secure, then pay the customs duty later when the goods were sold has been a booster to Tonga's import and retailing business since the 1990s.
Paulo Kautoke, the Secretary for the Ministry of Labour, Commerce and Industries, said that the objective for the establishment of bonded warehouses was to encourage wholesalers to import in bulk and in return gave the public to access cheaper imported goods. Paulo said that his Ministry was responsible for the issuing of business licences for wholesaling, and to date they have issued 20 licences, "but issuing permits to own a Bonded Warehouse was the responsibility of the Customs Department and the Ministry of Finance."
The Customs Department confirmed that there were currently 20 bonded warehouses in Tonga, which means that all wholesalers have bonded warehouses. Some of the conditions for a bonded warehouse to be granted are that there should be a high security fence, and for the Customs Department to have a key for the warehouse, so that a customs officer may enter and check the warehouse at any time.
After two consultation meetings between bonded warehouse owners and government officials, John Sullivan, a local businessman, said that they had been informed by the Prime Minister that the only possible way for them to stop the proposed closure of warehouses early next year was to lobby the members of parliament to vote against the new Customs Bill that might be debated by the House this year.
Following Wednesday's meeting of interested parties, a letter signed by 15 local business people was written to the Prime Minister Hon. Dr Feleti Sevele as chairman of a Customs Task Force that also includes Peter Slack and local businessmen Michael Jones, Bryan Welch, and Tapu Panuve.
The letter questioned the manner in which the issue of the proposed revocation of all existing warehouse licences had been handled by the Task Force.
"There is concern that the meetings and consultation with the Task Force by the warehouse operators will be little more than a token gesture, and that in reality the decision to table, and pass the relevant legislation in the House has already been taken," the letter stated.
"Government is taking away a right which has previously been guaranteed to a group of citizens or residents consequently threatening their livelihood, and that of their employees, without any right of recourse."
The letter asked for an assurance that the Customs Bills would not be presented to the Legislative Assembly earlier than November 20 in order to allow time for genuine consultations.
Angry
There may have been some bonded warehouse owners who abused their special privileges, but the other warehouse owners are angry at the proposed closure.
Meleane Toloke, of the Toloke Enterpries called the proposal "reckless". Meleane and her husband, a former 'Ikale Tahi and professional rugby player, returned to Tonga to invest four years ago. They engaged in a number of business ventures including the importation of used cars from Japan. Two years ago they were granted the bonded warehouse status for their car yards indefinitely. "We have just imported 150 cars, and 300 more have been ordered to arrive in Tonga early next year. It is reckless for government to suddenly decide to close down bonded warehouses. If they do we will close down our business and leave for overseas."
Meleane said that if the move was indeed part of the government's anti-corruption drive then all they had to do was, "to keep an eye on their custom officers, and make sure that they do their job properly. We abide by their conditions, we built a security fence, and made our yard accessible for them to come in and inspect our vehicles whenever they want to, and we had proved to them at the beginning that we had an account in excess of $60,000. If they know that a certain warehouse has abused their permit then they should take them to court and terminate their permit."
Meanwhile, Parliament is currently in recess while members are on their annual national tour. When the House reconvenes on November 6 there are a number of urgent pieces of legislation to be dealt with before it closes before the end of November, such as the new Taxation Bill, the Customs Bills and, of course, the fate of the sidelined NCPR report.