Tonga's export fishing industry is dead, say business people who have abandoned their efforts to keep it alive, after years of paperwork battles with government officials and the ministry responsible for fisheries.

When asked about the state of Tonga's fishing industry, Tricia Emberson, the secretary and the treasurer of the Pacific Islands Tuna Association (PITIA), declares it: "Dead!"

Another member of PITIA, Tima Tupou agrees with her.

"There are still one or two boats that go out fishing, but you cannot call that an industry," said Tima.

In the days when there was a thriving industry, with fishermen going out to sea, and fishing boats coming into loaded with fish, there was a lot of activity in the port, with the unloading of fishing boats, the packaging of fish for export and the air freight of fish to overseas markets.

Proof of the disaster that has overcome Tonga's fishing industry is the number of fishing boats that are either tied up or have sunk in the Faua Harbour and lie abandoned in the Nuku'alofa harbour.

So what happened to an industry that was thriving up to the turn of the century, and bringing in millions of pa'anga in export earnings for Tonga at its peak?

Fighting the system

It seems that paperwork has wrapped up one of Tonga's last big fish exporters.

Tricia who put her 'Alatini export fishing company into voluntary liquidation in October believes that unreasonable taxation policies have prevented her from succeeding in what is, "a viable but tough industry."

"I've had enough and decided that being in business is not worth it. I am sick of struggling. I'm tired of fighting the system," she said today.

Her 'Alatini Group of companies, was one of a handful of fishing exporters who had survived the challenges of the last decade.

She said that the first nail in the coffin was the increasing fuel prices.

"The fuel price crisis in 2003-4 had a huge impact, but we struggled and diversified and this helped us to get through. Then the electricity prices went up, and freight costs all increased, and turned viable businesses into failing ones. Those that could not cope went bankrupt."

But she said it was the introduction of Consumption Tax by government around 2005, and an unreasonable policy on rebates, that has finally, "killed the industry".

Rebates disputes

Consumption Tax (CT) rebate policy is at the heart of her battles with government.

Tricia said her rebate claims have cost 'Alatini Group hundreds of lost hours in doing paperwork for government auditors, "with no satisfactory result."

Fishing companies pay large amounts of CT on imported bait, fishing gear, fuel and running expenses, and like all TIN-registered companies they are entitled to claim a rebate on CT paid on "inputs" - or the purchases made for the running of their businesses.

CT works like this: normal trading companies collect 15% CT on local sales (their output), and before they pay this to the Revenue Services Department every month, they are allowed to deduct the amount of CT they have paid on purchases (their business inputs). Most trading companies pay an output balance to the RS because their collections of CT are higher than their claims for rebates.

But export companies do not collect CT, and have large running costs, so they claim large rebates, due from the tax department every month, and this is where their difficulties begin.

Tricia said that it was impossible for such companies to get their full rebate claims to be paid back by government.

"Every fish exporter is having this problem," she said. " 'Alatini is disputing $359,779.31 because Revenue Services won't issue a refund that is due," she said.

"If I could have that money in my businesses, we can grow and survive the challenges that face the industry. But every time we file a monthly CT return that shows a credit due, they audit us."

Audits

Tricia has been audited by Revenue Services seven times since 2006. "It involves hundreds of man-hours for the company, and disrupts our daily work. It is very stressful with no good outcome - they simply disallow most of our claims and then require more paperwork when we dispute it."

Trisha said that when audits happen, they typically involve two of her staff and two revenue officers and go on for four to five weeks. "We drop everything. Then, after the audit staff go home at the end of each day, we are staying on later to catch up with our daily work. It puts us far behind with our work and it's unacceptable doing hundreds of hours overtime in order to go through the process.

"We have to do those auditing things instead of doing what we are supposed to be doing. I'm tired of it."

The 'Alatini Group employed up to 150 staff during its peak and has a huge volume of daily transactions in a complex group of five enterprises.

Penalties

Trisha grouped her five companies, when she was advised early on that it would be easier to balance the CT inputs and outputs across the group to reduce rebate claims that way.

As a result, 'Alatini was threatened with a $2.2 million demand claim from Revenue Services, "and $1.9 million of that is penalties!" said Tricia.

The audits began in 2006 and by 2008 she had made redundant half of the group's workers.

Trisha said that she faced the same problem as other fish exporting companies and that was why they all called it a day and gave up.

It was not an easy decision for people who have spent their whole lives and investments in developing Tonga's own fishing industry.

Tricia said that government did not appreciate the fact that a minimum investment of $5 million is required to set up a fish exporting company. To keep the industry running Tongan fishing companies faced the difficulties of a higher unit cost of production compared with that of our neighbouring island countries, because of a higher labour cost.

"We have huge upfront costs for bait, fishing gear, fuel and freight to get our snapper and yellow fin to markets in Japan and the United States, and we do not get paid until weeks later,." she said.

Pillar of Tongan economy

With fisheries and agriculture being two of the three pillars of the Tongan economy, including tourism, Tricia could not understand why government treated the fish exporters differently from agricultural exporters. Agricultural exporters are exempted from paying CT but not the fish exporters and, "that in itself translates that the fishing industry gets no support from government."

Tricia suggested that the first thing for government to do to revive the industry was to ask the question: "why is the fishing industry booming in Fiji and our neighbouring island countries, but not in Tonga?"

Tricia believed that once we had identified what we have been doing wrong, or not doing at all, then we might revive the industry.

Tricia said she had only recently received a request from Tonga's Minister of Fisheries to provide a paper to explain what had happened to the fishing industry, with the aim that it would help to educate government ministers on what it takes to get fish exports out of Tonga.