From the House, by Pesi Fonua

Tonga Legislative Assembly, Minute No. 6, Thursday June 9, 2005

Following the Minister of Finance's presentation of his Budget Statement the day before, clarifying where he stood with regards to his Tax and Economic reform program, the Minister, Hon. Siosiua 'Utoikamanu, came under a relentless attack from the People's Representatives, picking holes in his Budget. The questioning was so intense that before lunch the Minister slipped out from the House, and after waiting 25 minutes for him to return, the House broke up for lunch.

Leading the attack was Vava'u People's Representative Samiu Vaipulu, who expressed his utter dismay over the two different sets of figures in circulation about Tonga's foreign earnings from tourism for the 2003-04 financial year. He pointed out that the Minister's figure was $14 million, while the figures published by the Tonga Visitors Bureau, was $22 million. He also expressed concern over a pitiful allocation of only $400,000 per annum for promotion and marketing.

Noble Lasike, the 'Eua Nobles Representative, made his maiden speech and members clapped. The young noble said that his working agenda for 'Eua was for more development and he would engage in the business of extracting orange juice for export. He ended his speech by asking government to liaise with banks over their terms on mortgages, he thought was unfair for a Tonga to mortgage his eight-acre tax allotment for 30 years, for a loan of less than $100.

Private Sector needs help

The 'Eua Representatives got into full swing and Sunia Fili followed on from Noble Lasike and expressed his concern about Tonga's over reliance on overseas aid. He said that in this year's budget he noticed that $42 million was to come from overseas donors. He said that Tonga could stop this degrading attitude of depending on other people if government helped the private sector. He said that the government of Samoa assisted their private sector by guaranteeing their loans, something he said that Tonga should adopt. He said that there had been a lot of talk about bottling 'Eua water for export, but in the end nothing was done.

The next round from the firing squad was led by 'Uliti Uata who firstly, wanted a definite answer to his question - "How is government going to encourage the growth of the private sector?"

The Minister replied that government assisted the private sector by terminating the 20% Port and Service Tax, the 5% Sales Tax and the Fuel Sales Tax. He said that they were also working on the Income Tax Act and also looking at the Depreciation Schedule, and looking at making available some kind of financial assistance to the Private Sector.

'Uliti said he did not think the Minister knew what he was talking about, and pointed out that the Minister believed he was helping the development of tourism by terminating the 2.5% Room Tax. But then at the same time he imposed the 15% Consumption Tax, which realistically was not an encouragement but more of a burden on the industry. When the minister responded that the termination of the Port and Service tax, Sales Tax and the Fuel Tax all benefited the Tourism Industry, 'Uliti asked him to give a better answer because the industry never had to pay a 20% room tax.

Minister left

After the House had a break at 11 am the Minister of Finance did not return to the House but People's Representatives wanted him to be present. The Speaker called for a 25 minutes recess, awaiting the return of the Minister of Finance. He did not show up so the Speaker declared the House closed and it was time for lunch.

After the Lunch the Minister of Finance returned to the House.

The Speaker announced that Tongatapu growers drove their tractors to the House and presented a petition. He said he would photocopy the letter of petition and distribute it to members.

People suffering

In the Committee, 'Uliti Uata continued with his speech and stressed his point that government was imposing too much tax on the people at a time when the economy was so depressed and therefore the people were suffering. He likened the situation to a murder case, when a person was lying sick and dying some one decided to grab an axe and finish him off.

He said that the down sizing of the public service that government had been talking about was an utter nonsense, because the money that they had saved from reducing the civil service, they had now decided to give back to themselves as a salary rise. It was defeating the purpose and still not saving any money to help the people. He said that the tax burden that government had bestowed on people was for the advantage of the government and the civil service, but nothing for the rest of the population.

'Uliti Uata pointed out that government had not been able to reduce its spending, and queried why there was a $5 million increase in the budget of the Ministry for Foreign Affairs, and a 100% increase in the vote of the Tonga Defence Service. He finished off by asking the Minister what did he spend the $10 million he borrowed from the Asian Development Bank because he could not find any explanation in the budget.

Public discontent

There was no response from the Minister of Finance, so the Tongatapu People's Representative, Clive Edwards, continued with the attack and emphasised his point that there was no Economic Reform but an exercise of taxing the people to death. Clive also believed that government was misleading the people when the Minister stated that the total amount to be collected from taxes in the coming financial year amounted to $46 million. He said that this calculation was based on the volume of imports, and missing from the equation was the Consumption Tax collected from services. He suspected that they were hiding that amount.

Clive went to say that while government was imposing a tax burden on the people, other sources of revenue had been ignored. He said that Tonfön had not paid TCC $5 million for its 16 telephone-lines service. On the other hand the dividend that government got from TCC was only $1 million when the TCC annual profit was well over $5 million.

He said that we had witnessed the biggest demonstration in Tonga last month and today again was a new protest by the growers. He suggested for government to find a solution to the growing public discontent.