The government's need to increase its revenue collection was the reason behind increases of up to 700 percent in compulsory government licensing and service fees that had been variously brought into force over the last two years, Tonga's Chamber of Commerce was told on October 5 at a public consultation with some members of parliamentary standing committees.

The chairman of the House's Public Finance Committee, 'Aisake Eke, who invited frank comments from about 50 business people attending, said the increase in fees was a response to government need.

"Some fees have gone up by 700 percent - that's why people feel the weight," he said.

But he admitted that the increases were already part of the government's budgeted revenues for this year. "We don't want to affect government's capacity to function this year and a reduction of financial strength would affect the ability of government to provide services to you," he said.

However, at the end of the meeting an unanswered question remained. Was it legally correct for the House to pass the government budget for 2011-12 in June, and that government was already collecting revenues, when there were no public consultations and some of these fees-setting regulations had not been passed by the House?

Request for consultation

The consultation at the Moulton Hall was a response to a request by the President of the Tonga Chamber of Commerce and Industry, 'Aloma Johansson, to the Speaker of the House, Lord Lasike, for clarification on a question raised in the House that the House was going to pass the regulations to increase company and business licensing fees, and possibly company taxes, without any public consultation. Most fees had doubled but many had greater increases of over 500 percent and some up to 700 percent, and were already being imposed.

It was attended by nine members of parliament, including the Speaker, his deputy and three ministers, who are members of various parliamentary standing committees.

From the out-set of the meeting, Hon. Lisiate 'Akolo chairman of the Standing Committee on Foreign Affairs, Defence and Trade asserted that the meeting was part of their public consultation of these regulations because the law stipulated they should come to the public before approving the regulations.

But in answering a question from the floor if the regulations had been put into force, the former Minister of Labour, Commerce and Industries, now Minister of Police, answered, yes, once they were approved by the Cabinet they had come into force.

An agenda that was prepared for the meeting by the Parliamentary Committee listed six regulations that listed large increases in fees. One of them, the Traffic Regulation had been enforced since 2009.

Business people asked, then, what was the use of a public consultation? Lisiate explained that the procedure was that Cabinet drafted and approved the regulations, which came into force. After that they were tabled into the House to be endorsed. "But if the regulations would have an impact on the public, as these regulations do, then that is when public consultations are called for," he said.

Farce

It became clear that the lawmakers did not think that all legislation has an impact on the public.

A view was expressed from the floor that the process of public consultation was a farce and that the cabinet and the parliament would draft and pass legislation as they pleased regardless of the impact on businesses and the public.

Many of the people attending the consultation left early.

Roads

A businessman asked what was the main reason for amending the Traffic Regulation in 2009, enforcing an increase in licensing fees, ranging from 50% to 500%. There had been no visible improvement in the quality of the roads or in the administration of traffic, and the standard of driving and the quality of vehicles on the road remained poor. He would not mind the increase in fees if the standard of the roads increased by 500% but the current bad state of the roads was costing his business over $35,000 a year just in vehicle repairs.

So was the rise just to increase government revenue collection?

The answer from the members of parliament was that the need for increased revenue was the main reason for the increase in fees.

Chamber members felt that businesses that tried to comply with the regulations were the ones being penalized when other businesses were allowed to operate outside of the law.

Business licenses

On the issue of Business Licenses, Lopeti Senituli, a former Political Adviser to the former Prime Minister, queried the outcome of the decision by the government not to renew the business licenses of a number of small shops owners, because after a while these falekoloa's had reopened.

The Minister of Police, Lisiate 'Akolo (the former Minister of Labour, Commerce and Industry responsible for the issuing of business licenses), replied to Lopeti that he could not tell him in public, "but when we go outside I could whisper into your ear," he said.

"Come on tell us!" was the reaction from the floor, but the minister insisted that he could whisper outside.

There was an outburst of disbelief over what the minister said. It was suggested from the floor that his statement was in opposition to the official line that had been drummed out by the new government, about being democratic and transparent.

"That is your own personal view," said the minister.

Earlier, there was an uproar as one of the MPs suggested that Lopeti should answer his own question because he had been an advisor to the previous government.

But the Chamber President objected to the politicking. "Business people are not interested in the politics of what happened before, but their concern is with the impact of the rise of fees and licenses. We want replies from government and you are the Government now," she said.

Too many licenses

Businesses owners also questioned why they had to have so many licenses. One businessman who had to renew nine licenses annually suggested, "combine them into one and put your price on it to save us the time and problems of renewing all these licenses."

Others complained about the heavy penalties that were imposed for non-renewal of licenses and that businesses were not being advised when penalties were accrued against them, sometimes accumulating for years before they realized it. Businesses who could not afford to pay the accumulated penalties and interest on them were forced to close. There was a suggestion that it would be better for government to automatically renew licenses for registered businesses and send out bills to be paid in a business-like way.

Lisiate 'Akolo said the government was considering some World Bank recommendations for making business easier in Tonga.

Burden of fees

There were complaints over the difference in fees for private vehicles and company vehicles. There were strong complaints over the necessity for an expensive special driver's licence to drive a rental car as many companies used rental cars when their own vehicles were being serviced. It also impacted tourism.

It was also pointed out that the burden of high license fees in many areas of business was on top of the 15% consumption tax and the 10-20% PAYE taxes that companies had to pay from their gross sales income. With the downturn in the economy many small businesses were finding it difficult to meet their weekly expenses. But there seemed to be no consideration from government as to how much they were demanding from companies before they made a profit.

Chamber president, 'Aloma Johansson, said that if government viewed fees only as a revenue earning exercise with no consideration of the economic situation and capacity of businesses to function, "then you might just kill the golden goose."

Local businesses were stuggling to meet their expenses in the downturn of the economy.

The Minister also confirmed that 15% consumption tax had to be paid on the increased fees.

Immigration regulations

The PR for Ha'apai 11 Mo'ale Finau, a member of the standing committee on Finance and Public Accounts and the Standing Committee on Business proposed that it was not necessary to go over an agenda item on the rise in immigration fees, "because it affects foreigners and not Tongans."

But the floor insisted that the amendment to the 2010 Immigration Regulation be read because it was impacting everyone and they thought that some of the increases in fees were large, unfair and did not make sense.

The floor reminded the politicians that the regulations impacted overseas Tongans negatively and they were the people who were sending remittances. Examples were given as to how the immigration regulations created unnecessary obstacles to tourism, and also made it complicated, expensive and difficult for Tongan businesses to bring in the skilled and qualified staff that they needed for their operations that they could not find in Tonga.

Examples were that the annual working visa fee had doubled to $200 but even though a business had to pay that amount, the work visa could not be issued at the airport, so the business also had to pay another $200 for a letter to be issued from immigration so that the incoming staff member could come into Tonga on a visitor visa with a one way ticket. It was suggested that the old fee of $30 for a letter was reasonable but that the new fee of $200 for a letter was not. One business person asked what the $200 was for, because in their experience the last three letters they had paid for had not been sent to the airport and the incoming staff all had problems with immigration on arrival.

Tourism development sector people, who were present at the meeting suggested that not much thought had gone into putting high fees under the act on such things as marriage licenses, which had gone up to $300 or into student visas which had gone up to $200, because many overseas Tongans were returning for these reasons and high fees were discouraging to this niche sector of tourism. The benefits of encouraging such exchanges would not only bring in foreign exchange but would also strengthen relationships with overseas Tongan communities.

Adjourned

After three hours of hearing questions and complaints from businesses and answers from the MPs, the meeting was adjourned unfinished, with five items left on the agenda, including a closing prayer.

The agenda that was prepared for the meeting by the Parliamentary Committee listed six regulations that the members of parliament wanted to be discussed: an amendment to the 2009 Traffic Regulation, an amendment to the 2010 Immigration Regulation, an amendment to the Business Licenses Regulations 2010, an amendment to Companies Regulation 2010, an amendment to the Incorporated Societies Regulation 2010, and an amendment to the Property Regulations 2010.

No mention was made of any proposal to increase company taxes.

The evening of public consultation was attended by some of the members of the parliamentary Standing Committee on Foreign Affairs, Defence and Trade, and other committees, who were lead by the Speaker of the House, Lord Lasike, and included his deputy, Lord Tu'i'afitu; the Minister of Police Hon. Lisiate 'Akolo; the new Minister of Labour, Commerce and Industry, Hon. 'Isileli Pulu; the Minister of Finance Sunia Fili; the People's Representative for Tongatapu 5, and the former Secretary of Finance, 'Aisake Eke; the PR for Tongatapu 7, Sione Saulala; the PR for Tongatapu 10, Semisi Tapueluelu, and the PR for Ha'apai 11 Mo'ale Finau.