A private bill aimed at reducing the new consumption tax was rejected by the House after its first reading. Meanwhile, the Minister of Finance won a new Regulation giving the Chief Commissioner discretion to exempt organizations from CT - despite protests that it was illegal.

From the House, translation summary by Pesi Fonua

Tonga Legislative Assembly, Minute No. 17, Wednesday June 29, 2005.

- The Minister of Finance objected to Clive Edwards's Private Member's Bill.

- Clive Edwards's Private Member's Bill was thrown out after its first reading with votes of 18-11.

- 'Akilisi Pohiva reminded the House of a speech by the Minister of Finance that he would like to stop the Brain Drain with the allocation of $7.1 million for salary rise. He objected to the scale of a salary rise that had been distributed to the House, which was not in line with what the Minister of Finance said.

- 'Isileli Pulu expressed his concern over the 57% rise that Cabinet Minister awarded themselves.

- 'Uliti Uata said that the Higher Salary Review Committee which government said was an independent body, was not because it was appointed by Cabinet, and a number of times their reports were sent back to be revised.

- 'Akilisi Pohiva called on Dr Feleti Sevele and Hon. Peauafi Haukinima not to be part of the ministers' 57% salary rise.

- Clive Edwards expressed his concern over the amendment to the Consumption Tax Act 2003 when the first collection of CT has not been carried out.

- Clive Edwards said that CT would be charged on private posted parcels from overseas.

Two bills for amending Consumption Tax Act

The Speaker said that two Bills have been tabled with the House, a Public Bill from the Minister of Finance to amend the Consumption Tax Act which had been read twice and passed, and it had been requested to proceed to the Whole House Committee for debate. There was also a Private Member's Bill for the amendment of the Consumption Tax. It was presented by Clive Edwards, and it had not had its first reading.

A Tongatapu People's Representative, Clive Edwards, pointed out that in the Rules and Regulation of the House a Private Member's Bill should be given the chance to be explained and discussed before it had its first reading, because in the past Private Bills normally did not survive a first reading. He appealed for the House to discuss the Bill.

The Speaker suggested for the first reading of the Private Bill. If it survived its first reading, they would debate it.

The Minister of Finance, Hon. Siosiua 'Utoikamanu, explained the difference between the two Bills. His Bill was intended to improve the procedure of collecting Consumption Tax, whereas the Private Bill's intention was to reduce the rate and offer exemptions, which would affect the Estimated Budget.

Clive Edwards called on the Speaker to stop the Minister from debating, because they were not allowed to debate yet.

The Speaker called on the Clerk to give the Private Bill its first reading. It was rejected with a vote of 18-11. For it, were 'Akilisi Pohiva, 'Isileli Pulu, Clive Edwards, Samiu Vaipulu, Vili Helu, 'Uliti Uata, Fineasi Funaki, Sunia Fili, Lepolo Taunisila 'Ahome'e and Fohe.

Salary rise

The Speaker dissolved the Legislature and the Chairman of the Whole House Committee, Noble Tu'iha'angana took his chair.

The Tongatapu no. 1 People's Representative, 'Akilisi Pohiva, commented on a speech that was made by the Minister of Finance when he presented his budget statement, explaining that the $7.1 million salary rise was to stop the brain drain because about 400 qualified nurses, doctors, and teachers have resigned and left for overseas. He expressed his surprise that the new salary structure that has been distributed to the House was the opposite of what the Minister said.

He said the Prime Minister had talked of three phases of the salary revision, and during each phase the public servants were given the opportunity to make submissions and had requested further improvement of their salaries.

'Akillisi insisted that there was no ample time given for the House to debate the issue. He said that they were not given enough time to prepare themselves and to formulate questions before the Higher Salary Revision committee came to the House for questioning.

The Prime Minister had said that the committee could be called back, but 'Akilisi said for things to be left as they were, but his point of contention was that the $7.1 million, which supposed to have been allocated to stop the Brain Drain, had been used for something else.

'Akilisi called on the two elected Ministers, Dr Feleti Sevele and Hon. Sione Peauafi Haukinima, to detach themselves from the rest of the Ministers and not to be part of their salary rise.

Prime Minister comments on salary rise

The Prime Minister pointed out that 'Akilisi last year was supportive of a salary rise for members of parliament, and the details of the rise had been distributed to the House the day before.

A Tongatapu People's Representative, 'Isileli Pulu corrected the Prime Minister that what the members were given was a pension, but what the Ministers had just given themselves was a 57% salary rise.

A Ha'apai People's Representative, 'Uliti Uata, made a point that the Higher Salary Review Committee was not an independent body, because they were selected by the Cabinet. After submitting their report, they were told by the Cabinet a number of times to readjust their report, therefore the committee could not be independent if their report was not accepted by the Cabinet unless it was acceptable to the Cabinet.

The Minister of Health, Hon. Dr Viliami Tangi, said he did not know where 'Uliti got his information from since he was not in Cabinet, but he denied any involvement by the Cabinet in the decision making of the committee. He said that when the committee submitted the first draft of their report to Cabinet that Cabinet Ministers, judges and Level One of the civil service were given a rise. He said that it was then decided, and Clive knew about it, to give Level One the rise, since they were contracted and to leave the rest to be dealt with together with the rest of the Civil Service.

'Uliti reminded the House of the Minister of Finance's "stopping the Brain Drain" idea, which was supported by the House who voted for the $7.1 million allocation for the salary rise.

Go and sleep

The Prime Minister said that the committee could be called back and for the members to ask more questions, but 'Uliti insisted that they had been tricked by the Ministers by submitting the details of the proposed salary rise in the last minute, denying them the opportunity to debate on the issue.

The Prime Minister insisted that it was not their fault that members were asleep during the presentation of the committee, he said that they should go and sleep somewhere else, but not in parliament.

'Uliti made a point that the committee was given an assignment to review the salary but was not told where they were getting the money from and how much, they were simply told to review the salaries.

A Vava'u People's Representative, Samiu Vaipulu, told the House that the salary for a qualified captains of some of the whale watching boats in Vava'u were demanding a salary of $18,000 per annum, which he said was more than the basic salary of members of parliament.

He also pleaded with government to issue Development Licences for some of the tourism construction that was going on in Vava'u.

The Minister of Labour responded to give him time to re-examine the Development Licence issue again.

The Speaker dissolved the Legislature, and the chairman of the whole House Committee Noble Tu'iha'angana took his Chair. He called for debate to continue with the Bill to amend the Consumption Tax Act 2003.

CT and Church businesses

The Minister of Finance pointed out that one of the amendments he wanted to make was to redefine Enterprise. He said that under Clause 2 sub-clause A some church businesses should be treated same as other commercial enterprises. On sub-clause B he wanted a redefined Tax Period. He went on about numerous amendments he wanted to make to the Consumption Tax 2003. With regards to church businesses he said the Misinale, an annual church contribution, was not included.

He said he was trying to tighten up areas, where businesses with intention not to make profit also had a profit making operation, it was then not fair for them to come under the guise of non-profit when they were actually making profit.

'Isileli Pulu queried if church school bands which have been on fund raising overseas returned with their overseas collection, would they be taxed?

CT on parcels

Clive Edwards said that the 15% CT would be applied even to parcels that come on the post from overseas. He warned of the possibility of people losing their constitutional right to their properties because of the CT.

The Minister of Finance pointed out that under the Regulation the Chief Commissioner has the discretion to exempt non-profit organizations from CT.

Clive Edwards said that with the matter of law, it was unprecedented to give the authority to someone to decide what should be taxed and what should not be taxed. With legal matters one has to be specific.

The Minister of Finance reminded the House that the CT could only be applied if there was an economic or a financial transaction.

Opposition

Clive proposed for the House to reject the amendment because the CT has only came into force for less than two months, and the first collection of CT has not been made, and yet the Act was already undergoing major amendment.

Clive moved for the rejection of sub-clause A of Clause 2.

The chairman called for votes and it was rejected 10-14. For it were 'Akilisai Pohiva, 'Isileli Pulu, Clive Edwards, Samiu Vaipulu, vili Helu, 'Uliti Uata, Sunia Fili, Lepolo taunisila, Noble 'Ahome'e and Noble Lasike.

He called for votes on Clause 2 and it was carried 15-10. Against were the same ten members of Parliament who were in favour of the rejection of sub-clause A of Clause 2.

The Committee was dissolved and the Speaker took his Chair in Legislature. He called for votes on the second reading of Bill to amend the CT Act 2003. It was carried 17-8. Against were 'Akilisi Pohiva, 'Isileli Pulu, Clive Edwards, Samiu Vaipulu, Vili Helu, 'Uliti Uata, Sunia Fili and Lepolo Taunisila.

In its third reading it was carried 17-9. Against were 'Akilisi Pohiva, 'Isileli Pulu, Clive Edwards, Samiu Vaipulu, Vili Helu, 'Uliti Uata, Fineasi Funaki, Sunia Fili and Lepolo Taunisila.