Government will loose a major source of income [1]
Thursday, July 1, 1999 - 01:00. Updated on Friday, January 8, 2016 - 13:39.
From Matangi Tonga Magazine Vol. 14, no. 3, July 1999.
Free Trade offers an advantage in theory, but in practice Tonga will be giving the advantage to the importers, warns a former secretary to Finance and former MP ‘Uhila Liava‘a.
‘Uhila said there was no doubt about the theoretical advantage of Free Trade. “But when we are talking about trade, it means that we have to be able to buy and sell, import and export. Unfortunately, we have been importing more than we export, so by endorsing a Free Trade arrangement at this stage we are giving the advantage to the countries that we are importing from, and the chances are that our imports will increase while our exports may even decrease,” he said.
“So it could be devastating for us if our export industry is not in a position to take advantage of such a free trading arrangement. In addition, by abolishing tariffs, government will be deprived of a major source of revenue, which they have to get from somewhere else other than custom duties.”
‘Uhila said that the advantage for government collecting customs duties at the wharf means that there was a constant flow of income coming in. Sales Tax would take longer to collect and the flow of revenue would be slower, “so I don’t think government will like it, unless if they have found an alternative.”
Tongan produce
‘Uhila said that the only way that Tonga could take advantage of a Free Trade Arrangement was to include its two major trading partners of New Zealand and Australia. “By doing so we could get our agricultural produce such as manioke and ‘Ufi to enter those countries duty free, in return instead of ordering their expensive products, we could then turn around and import from Asia.”
The theory of Tonga trading with Samoa was good in theory but it was not working in practice, “because of a mental block, and a hang over from the past that only European made goods are the best.”