From Matangi Tonga Magazine, Vol. 15, no. 4, January 2001.

More efficient collection of taxes made the Tonga government $8.3 million richer at the end of the financial year, June 2000, compared to the previous year.

Government would continue to be better off as the Ministry of Finance continued with its restructuring program, said Tevita Lavemaau, Tonga’s first Commissioner of Revenue.

Tevita said that all his ministry did was to make sure that it collected what was owed to government. “There has been no increase in taxes, we just became more efficient in our collection.”

Hesaid the Ministry of Finance realised that the annual revenue of $60 million that it could collect using the previous methods, “was just not enough for government to meet obligations”.

To solve the problem it was decided to establish a Revenue Department and for the Treasury to be headed by, the Secretary for Finance, who should also be the Accountant General.

The restructuring of the Ministry was financed by the Australian Government, and the project tender was won by the University of New South Wales. ‘Aisake Eke the Secretary for Finance became the Accountant General, and Tevita, the former Accountant General became the first Commissioner of Revenue, a new post that was created when the new Revenue Department was formally established on 1 July 2000. It brought under its management three of the government’s main revenue collection divisions, the Inland Revenue, Customs and Trade, and the Postal Service. Three new divisions were created.

Tevita said that having a well-structured department was half the battle, the other half was to change the attitude of the staff. “There had to be a connection between the revenue collected and their salaries.”

Tevita said, “the result was very encouraging.” They estimated collection of $29 million, but collected $35 million. Sales Tax, estimated $5 million, but  collected $6 million., and Inland Revenue,  estimated  $10.2 million, but collected $11.5 million.

The next step will be to computerize the Sales Tax and Inland Revenue units by July 2001. Meanwhile, the European Union has agreed to provide funding for Tonga and five other Pacific island countries, to computerise their Customs operation with a system called ESCUTA. Tevita said that when the system was in place by the end of 2001,  cargo could  be electronically cleared  before it arrived. “The  data collected will link up with Inland Revenue and  we will have a fair idea of the amount to be paid to government.”

By the end of 2001 government would introduce a Goods and Services Tax, “collecting the same amount as  in direct taxation. It will be just a shift in the point of collection from the wharf to the shops,” he said.