From the House, an English translation summary from the Tongan vernacular, by Pesi Fonua. Tonga Legislative Assembly, Minute No. 8, June 25, 2007 (continued).

- 'Akilisi Pohiva continued to argue that business profits should be reduced.

- The Minister for Public Enterprises said that if they followed the advice of the member they may end up closing down these companies who are the main taxpayers to government.

Monday June 25, 2007, continued:

'Akilisi Pohiva continued with his point that all growers and people who engage in fishing should be exempted from tax. He proposed a progressive tax system of 20, 40, and 60% on private companies, particularly the top five companies that he had identified to be making millions in profit annually.

He suggested that if the Minister of Finance was scared of drafting such a tax regime then let them draft such a regime to reduce the amount of profit that these people are making.

The Minister for Public Enterprises reminded the House that the concern of the member had been addressed by the Minister of Finance but he went on to explain why government decided to tax commercial farmers and fishermen. He said that following a public consultation it was discovered that small time growers and fishermen who bring a few baskets of root crops to the market occasionally or a few strings of fish for sale on the side of the roads felt that it was nor fair for big time commercial fishermen and growers to be exempted from income tax. Fishing companies are exempted from fuel tax.

With regards to the push by the member for heavier tax on profitable companies, he said that the reason why they are profitable was because of their concern with work efficiency and their success in cutting back in their expenditure but increasing their productivity. He said that if they followed the advice of the member they may end up closing down these companies who are the main taxpayers to government.

'Akilisi said that he was not trying to put some of these businesses out of business, but it was to reduce their profit, which he said was just far too much, $7 million by Westpac and $5 million by ANZ. He said that while these people were making a lot of money government was out to tax the poor people.

The Minister of Finance asked the member to define what he considered to be a poor person. He reminded the member that anyone who earned less than $7,500 is exempted from tax.

The Minister for Public Enterprises also reminded the House that 80% of the government revenue is paid by only 20% of the population and the other 20% is paid for the remaining 80% of the population.

Clive Edwards said that the concern was because though there is an increase in income tax for big earners. If one earns $30,000 and more, the tax moved up from 10% to 20%. He said that while income tax increased to 20%, company tax remained at a flat rate of 20%.

The Minister for Public Enterprises reminded the member that they were talking about two different things, Income Tax and Company Tax.

With regard to a comment made by the Minister for Public Enterprises that only 20% of government revenue comes from 80% of the population, he said he did not believe the Minister, and stressed that there should be heavier tax on private companies.

The Minister for Tourism told the member that with his line of thought he was encouraging unfair practice. Because while people worked hard to make a profit then he comes along and punishes them. He said that it is ethically wrong.

'Akilisi told the minister to go and investigate the tax system in other countries where the more you earn the heavier you are taxed.

The Minster said that the $7 million that Westpac made was reasonable for them, and said if they pulled out from Tonga, "what are we going to do?"

'Akilisi said that he would be grateful if Westpac pulled out from Tonga, "because we would be able to run our own bank."

The Minister said that the member did not know what he was talking about.