From the House, Minute no. 24, Monday July 26. 'Uliti Uata queried the logic of the penalties for the non-payment of income tax. He said that Inland Revenue Department has been forwarding their assessment of income taxes from 1997 up to 2003 and demanding the payment of penalties and interest.

- The Income Tax Department can't collect tax over five years old that hasn't been paid.

- Call to limit the tax assessment time to 12 months.

Call for income tax to be calculated only on transactions that have been paid.

- The misused of tax exemption privilege.

- A company with $20 million tax exemption was said to transfer its tax exemption licence to another company.

Speaker ...– called for the first reading of a Bill for the Guardianship, Access, Custody and the Customary Adoption of Children Act 2004.

After its first reading, it was passed 19-0, but after its second reading Sunia Fili moved for the Bill to be passed down to the Whole House Committee for debate.

The Chairman of the Whole House Committee, Noble Tu'i'afitu took his chair.

Chairman ...– reminded the House of where they left off the week before. He said that proceedings would continue with Extra Ordinary Gazette No. 32 of 11 September 2003, a regulation to administer the collection of revenues.

'Uliti Uata ...– queried the logic behind Clause 7, which outlined the penalties for the delay and the non-payment of income tax. He said that the penalties and the interest must be paid first before the actual amount owed is paid. He said that currently the Inland Revenue Department has been forwarding their assessment of income taxes from 1997 up to 2003 and demanding the payment of penalties and interest. He said that if there was any payment to be made it must be the actual amount owed first before the penalties and interest were paid.

Minister of Justice ...– said that was how the department processed the payment of tax. He said that if a tax payer failed to pay his tax a penalty and interest were added on. The tax payer then had to pay the penalty and the interest first before paying his tax. ... He said that the tax payer has been penalised for not paying his tax on time, otherwise there is no incentive for those who paid their taxes on time.

'Uliti Uata ...– said that if the repayment of income taxes were made on installment, then instead of the penalties and interest were paid first before the principal tax repayment, it should be the other way around.

Dr Feleti Sevele ...– supported the concern expressed by the member. He told the House of what he thought was an unfair practice procedure of the tax department. He said that after a taxpayer had filed his tax return form for assessment, then there was a long wait of between 5 to 7 years, then suddenly there was a letter from the department demanding a payment to be made before the end of the month. He said that there should be a definite time for the assessment of tax returns.

Minister of Police ...– said that it would be breaking the law for the department to demand the payment of income tax during the past six or seven years. He said that the limit is five years.

Dr Feleti Sevele ...– said that the department made a point that the five year period that the Minister of Police was referring was to begin from when they started assessing the income tax return forms. He that the court had yet to make a decision on when the five years started.... 

He suggested for the assessment period to be 10 to 12 months.

Minister of Finance ...– accepted the suggestion and asked for a time to assess the situation and he would return.

'Uliti Uata ...– asked the Minister to set a definite time for the assessment of income tax returns.

Chairman ...– said for the proceedings to move on to Clause 9 on the assessment of the income tax of businesses with income of less than $100,000.

'Uliti Uata ...– wanted to know what would happen if the time for the calculation of Consumption Tax, sales on credit had not been settled.

Minister of Finance ...– said that if the transactions had taken place then the tax must be paid because the goods had been sold.

Minister of Police ...– said that the situation was the same with that of a client who ran away without settling his lawyer's fee, because the department would still demand for the lawyer to pay the tax even though he had not been paid.

'Uliti Uata ...– said that tax should be paid on money already received from a transaction, if the payment has not been made then tax could not be paid.

Minister of Health ...– expressed his concern that government would bear the consequences of the failure of seller and the buyer to keep their agreement.

Dr Feleti Sevele ...– said that the concern expressed was not to put the burden on government, but simply to get the procedure right. He said that there are provisions in the law to deal with some of these problems such, as the provision for Bad debts and a provision for Damaged Goods.

Acting Prime Minister ...– said that they were stuck on the definition of the term Sales. He said that in the law it stated Sales, but they should redefine sales to Cash Sales and Credit Sales. He said that if they could do that then may be they would be able to move forward on the issue.

Minister of Finance ...– said that under the Sales Tax Act cash sales and credit sales were taxed, but because we would be doing away with the Sales Tax early next year and they were working at amending the Constitution in order to address how a Cash Sales and a Credit sales could be taxed.

'Uliti Uata ...– called for the deletion of sub-clause 7 of Clause 15 which gives the Commissioner the right to publish the name of a tax offender.

Chairman ...– called for votes and it was rejected 12-7. For it were 'Akilisi Pohiva, Dr Feleti Sevele, 'Isileli Pulu, 'Etuate Lavulavu, Fineasi Funaki, 'Uliti Uata and Peauafi Haukinima.