Tonga's decision to defer its accession to the World Trade Organisation (WTO) until July next year will have no impact on the revenue collection of government during the current financial year, according to the Secretary for Finance, 'Aisake Eke.

The approval by the Tongan parliament in June for the introduction of a new Customs Tariffs Schedule to come into effect on August 1, 2006, would have meant a loss of revenue for government, because the terms of Tonga...’s accession to the WTO places restrictions on the level of duty that may be imposed on imports. The so-called ...‘final bound rates...’ restricts to 15 or 20 per cent the rates that may be applied to imports. A significant impact on government revenue was anticipated from the adoption of the new WTO Customs Tariff Schedule, and the loss of revenue must be made up by other indirect taxes.

The delay in accession to the WTO means that government will continue for another 12 months to collect revenue under the old tariff rate, and will also withhold the introduction new indirect tax regimes. 'Aisake, however, did not think that the delay in Tonga's accession to WTO membership will have any impact on the balancing of the 2006-07 budget.

It is not clear how government was going to introduce the new Customs Tariff Schedules rates on August 1 since the new tariff has not been approved by the House, but 'Aisake said that the 12 months delay will enable them to table the legislation into parliament this year and have it implemented before July next year.

'Aisake said that the original strategy was for Tonga to get its WTO membership first and then pass the legislation later, "but now we will have to get the legislation in place before accession to WTO membership."

The Head of Tongan Customs, Lee Degan, and Lepaolo Vaea from the Revenue Department, said that the process of introducing a new Customs Tariff Schedule rate and a new computer system, PC Trade, are on schedule. The legislation will go into parliament this session then it will be implemented before next July, and the PC Trade will be implemented in September as scheduled. They both agreed that the delay gives the Customs department time to get used to the new tariff rates and the PC Trade system with their clients.