By Pesi Fonua

Parliament has reduced the duty on imported vehicles by 50 per cent, rejecting a four months old formula that was introduced to encourage Tongans to buy newer and more fuel-efficient vehicles.

A revised rate that was passed by the House on Tuesday, September 2 dropped the rate to 75 seniti per cc for vehicles 1500cc and under; $1 per cc for vehicles from 1500 to 3000cc; and $1.25 per cc for from 3000cc upward.

The cuts came four months after a new formula and a new rate was introduced on May 1. Under the new formula duty was calculated based on the cc capacity of the engine of a vehicle whereas the old formula was a 45 per cent duty on the landed value of an imported vehicle.

(The rate under the new formula was initially $1.50 per cc for vehicles 1500cc and under, and $2 per cc for vehicles from 1500 to 3000cc, then $2.50 from 3000cc upward.)

Contentious

Following the passing of the Excise Tax Act last year there was contention among members. The Act was going to be enforced in February and then it was postponed until May 1, allowing a three months transitional period.

Since May the issue kept popping up in the House, with some members suggesting a return to the old formula of 45 per cent duty on vehicles. They did not like the new rate because the duty for a second hand vehicle would be the same as for a new vehicle, and because people could not afford newer vehicles.

The argument by those who favoured the new formula because it would encourage people to buy new vehicles, with better fuel efficiency and with better exhaust systems, conserving fuel and causing less air pollution, was not enough to convince the elected representatives.

When the House closed for the coronation on July 22 there was an understanding that the Minister of Finance would look into the issue of duty on vehicles and the House would deal with it when they reconvened.

Regulation amended

In debate on Gazette 6 the Regulation for the Excise Duty Act 2008, on Tuesday September 2, the charge was led by the Speaker, Noble Tu'ilakepa. There were a number of suggestions and one was to extend the transitional period for another month before enforcing the new rate of duty.

The Minister of Justice, 'Alisi Taumoepeau pointed out that the first three-months transitional period was for the benefit of people who had already ordered vehicles under the old customs rate, "but those who are calling for another month of transitional period ordered vehicles knowing that a new rate was in place."

She urged for the vote on the Regulation to be deferred until Thursday.

The Minister of Finance Afu'alo Matoto also pointed out that the new formula was introduced with the belief that it would curb alleged corruption in the Customs Department, but because of the demand by the people he was thinking of amending the Act so that both the old and the new formulas could be used.

Split

The plea by the Minister of Justice for voting to be deferred to Thursday was disregarded and the Chairman called for votes on a motion by Teisina Fuko for the rate on the new formula to be reduced by 50%.

The voting was a draw 12-12, but the casting vote of the Chairman, Samiu Vaipulu passed the motion to amend the regulation.

Against were the Prime Minister, Deputy Prime Minister, Minister of Police, Minister of Labour, Commerce and Industries, Minister of Transport, Minister of Education, Minister of Tourism, Minister of Justice, Minister of Youth and Sports, Minister for Foreign Affairs and Defence, the Minister of Finance, and the Governor of Ha'apai.

The House passed Gazette 6: the Regulation and the Amendment to the Excise Duty Act 2008