By Pesi Fonua

Noble Tu'ilakepa, the Speaker of the Tongan Parliament, caused an uproar in the House on Tuesday September 2 when he pleaded with the Prime Minister and the Cabinet to reduce the 20 per cent tax imposed on the incomes of members of parliament.

Only three months after the House passed new national tax rates, along with the Budget legislation in June, it was clear that a number of elected members did not understand how the new tax rates work and did not like that fact that their own salaries are being taxed at the new level.

The House was in the second day of debating Gazette No. 5 with a Regulation for the new Income Tax Act, which came into force on July 1.

Emotional

The Speaker made an emotional plea, saying how down-hearted he was as he observed members receiving their "pitiful" pay packets before they left for their annual national tour.

He pleaded with government for the income tax to remain at the old rate of 10 per cent.

He said that the low salaries for the members meant that some members did not complete their national tour, and he had received phone calls from members complaining about the big reduction in their pay packets.

Allocation

But under the current budget passed in June the House had already allocated $100,000 for members to put in their pockets and hand out at will, when they went on tour. The People's Representatives had requested an additional $500,000 and it was left for the Minister of Finance to see if he could come up with the money before the national tour. (It is not known whether they were granted any extra allocation or not.)

New Tax Act

Under the new Income Tax Act those who earn $7,401 and less are exempt from tax. From $7,401 to $30,000 there is a 10 per cent tax, then from $30,000 upwards the tax is 20 per cent.

The major concern by members, particularly the PRs and the Nobles' Representatives, was because under the new Income Tax Act, the tax went up from 10 per cent to 20 per cent on their basic salaries and benefits, including overseas travelling allowances and per diems.

For the Speaker and some of the members to pressure government to reduce the tax rate because it was hurting their pockets upset other members of the House, because it was against their Rules and Regulations to debate issues in which they have a vested interest, and unethical to think only of themselves and overlook the interests of the rest of people who elected them into the House.

There were a number of attempts to discourage the Speaker from insisting that the government to reduce the tax because of the 20 per cent reduction in their earnings.

The Minister of Finance, Afu'alo Matoto, reminded the Speaker that it was not the right thing to do to leave aside the interest of the whole country and address only the financial concerns of members of parliament.

'Akilisi Pohiva also asked the Speaker to drop the issue.

Persistent

On the other hand Noble Lasike suggested for the new tax rate to be halved, the 10 per cent tax on those who earned between $7,401 and $30,000 should be reduced to 5 per cent and the 20 per cent who earn $30,000 and more should be reduced to 10 per cent.

Teisina Fuko also suggested a gradual increase with small increment of say 5 per cent, so instead of jumping from 10 per cent to 20 per cent it should go 5 per cent, 15 per cent and then eventually 20 per cent.

Then after all the strong words and the anger over a notion that the basic salaries and the allowances of members had been reduced by the 20 per cent income tax, it eventually became clear that the members did not understand how the tax was applied.

Explained

Both the Prime Minister, Hon. Dr Feleti Sevele, and the Minister of Finance, took turns to explain that it was straight forward.

The Prime Minister used the Cabinet Ministers' parliamentary salaries as an example. He said that a minister's Basic Salary was $32,000. The first $7,400 was tax-free, therefore the remaining $24,600 was taxed 10 per cent. He said that even if the allowances of $5,400 were added on it was only going to be the remaining figures above $30,000 that would be taxed 20 per cent.

There were still a few unbelievers, but after the Minister of Finance went through the taxation levels again and explained how the salaries of members were taxed, there was a feeling of embarrassment in the House, not only because they did not know how the tax that they passed was applied, but also because they exposed how self-centred they were.

To save their faces, both Teisina Fuko and Samiu Vaipulu insisted that they were not referring only to the members of parliament but for anyone who was on that salary level.

The Speaker, who initiated the uproar was very open and confessed that he did it with a "clean heart."

The Regulation for the new Income Tax Act was passed 21-3. Against were 'Etuate Lavalava, Uliti Uata, Teisina Fuko.