1% foreign exchange levy deferred "a few weeks" [1]
Tuesday, November 10, 2015 - 22:01. Updated on Wednesday, November 11, 2015 - 15:13.
The implementation of the government’s controversial 1% Foreign Exchange Levy has been deferred again for a “few weeks”, stated the Minister of Finance, Hon. ‘Aisake Eke in a letter, dated 6 November, circulated to general managers of financial institutions in Nuku’alofa.
The Foreign Exchange Levy Act 2015, which was enacted on 15 October, was initially scheduled to come into force on 21 October, but due to a breakdown in communications between the Ministry of Finance, commercial banks and financial institutions, the implementation date was deferred to 3 November.
However, 3 November came and went, but there were still uncertainties over calculation procedures and the interpretation of the legislation, which was translated from English to Tongan. The Tongan version was given precedence.
More details
Meanwhile the Minister will present the regulations to Cabinet setting out in more detail the procedure for calculating the levy. He will also inform them of the estimated amount that government hopes to be able to collect from the 1% levy to help finance the hosting of the 2019 Pacific Games.
“This will take a few weeks to complete. In the meantime I am setting out the explanation in this letter to help you review the arrangements you will need to put in place,” he stated.
It has been estimated that Tonga needs $80 million pa’anga to host the 2019 Pacific Games. To date the only contribution that government had received was NZ$2m from the New Zealand government for the upgrading of the Teufaiva Stadium.
Cabinet will ponder over the regulations and the procedure of how the 1% levy is calculated and collected.
Hon. ‘Aisake Eke in his letter outlined a procedure and he was optimistic that by the time cabinet would finally agreed on date to implement the 1% levy, commercial banks and Financial Institutions would also be ready to start collecting the levy.
The Minster presented examples of two calculations to show financial institutions (FI) how to collect the 1% Foreign Exchange Levy.