Tax cheats will not be tolerated, warns Finance Minister [1]
Monday, March 7, 2005 - 16:00. Updated on Thursday, May 8, 2014 - 16:13.
The Tongan Privy Council on Friday March 4 approved the implementation of Tonga's new Consumption Tax. Later, in the afternoon, the Minister of Finance, Hon. Siosiua 'Utoikamanu officially launched Tonga's Consumption Tax which will come into force on April 1.
The Minister said that the occasion marked an important achievement, "in our steps towards comprehensively reforming Tonga...s taxation system and modernising the revenue administration." He said that the new tax system will be fairer, and it will be much harder than in the past for people to escape paying their fair share. "If they try to cheat we will have modern tools to detect bad behaviour and the power to prosecute vigorously.
"I take very seriously tax cheating activities ... in my view these activities are no different from stealing from the Crown ... and ultimately stealing from the ordinary honest working people of Tonga."
Siosiua said that the Tonga Consumption Tax is a tax on consumption spending that is collected for the government by merchants, growers and manufacturers.
He declared exempt from TCT exports, electricity, financial services, health care and education, "but everything else will be taxed."
The Minister believed that consumption tax will remove hidden distortions of commerce that adversely affect the international competitiveness of Tongan businesses.
With regards to the impact of the Consumption Tax on the consumers, the minister said that the personal and business services consumed by household will rise by the full extent of the TCT, "but such services make up a tiny component of the spending by ordinary Tongan households, but are mainly consumed by the well-off and overseas tourists."
He said that with fuel prices there will be a 1% increase in petrol and a 1% decline in diesel.
The Minister emphasised that electricity prices will not be affected by the Consumption Tax, as well as the cost of water for most domestic households, excepting for a small number of extremely high water users who are on domestic tariffs.
When he was asked why did the Privy Council rush the implementation of the TCT, since it still had to be approved by Parliament when it reconvenes in May, and what will happen if it is thrown out by the House, the Minister curtly replied that we would then go back to the old taxation system, "and good luck to you."