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HONIARA, Solomon Islands (November 29, 2001 - Solomon Star/PINA Nius Online)---The finance minister does not have the power to reduce customs duty for his friends or supporters, according to a Solomon Islands High Court ruling.

If the minister wants to reduce customs duty, he should do so for all importers and exporters alike, the ruling effectively says.

Under Prime Minister Manasseh Sogavare's government, nearly Sol$ 100 million (US$ 18,180,000) has been lost as a result of Finance Minister Snyder Rini granting customs duty reductions to friends and supporters.

The ruling by Justice Frank Kabui comes before next Wednesday's general elections. The loss of government revenue due to the duty remissions – and its impact on the country's financial crisis -- is one of the issues.

Justice Kabui's decision is expected to halt granting of the controversial duty reductions by the finance minister.

The judge said: "Does the finance minister have the power to reduce customs duty for his friends or supporters of his government or anybody for that matter at the expense of government revenue?

"The answer is no.

The ruling means that finance ministers had all along been acting illegally when granting customs duty reductions and exemptions to friends and supporters.

Justice Kabui¹s ruling stemmed from a case brought against the state by a local business house, Golden Star Trading.

In September 1996, Golden Star applied to the Minister of Finance for duty remission with respect to imported goods where a 50 percent remission was granted.

But, in April 1997, the minister turned around and revoked the duty remission. This resulted in Golden Star having to pay full duty on goods it had ordered before its 50 percent duty remission was revoked.

It was from this action that Golden Star sued the finance minister over what it claimed as losses as a result of the decision. The sum being claimed was Sol$ 118,750.02 (US$ 21,588.80).

Justice Kabui said the case was a strange one, and he found it rather awkward to deal with it.

Remission of Duty and Reduction of Duty by the Finance Minister are respectively addressed under Sections 7 and 8 of the Customs and Excise Act (Cap. 121).

But, according to the ruling, the act does not empower the minister to grant duty reductions or exemptions to any particular individual or business house.

If the minister wants to reduce or exempt the duties on a particular product, all importers or exporters dealing with that product are entitled to that duty reduction.

Justice Kabui said: "In practice, the finance minister decides the rates of duties to be imposed on goods imported into Solomon Islands or exported from it.

"The minister also decides which good do not attract duties."

He stated that the First Schedule under Section 7 of the Act contains the rates of customs duty that apply to all goods imported into or exported from the Solomon Islands.

The rates of customs duty in the First Schedule are not the same. Some rates of customs duty are higher than others.

The First Schedule also contains goods that are exempt from customs duty.

Said Justice Kabui: "The rates of customs duty in the First Schedule are the maximum for individual items of goods to be paid by all importers and exporters.

"The First Schedule is a level playing field for all importers and exporters alike. The only exceptions are exemptions from customs duty.

"These exceptions are conventional in that they apply to the Head of State and Diplomatic Missions in Solomon Islands and other goods to be used for public benefit."

He stressed that any amendments, suspensions or revocations made by the minister do not have any element of choice from exemptions, as to who should benefit from such changes.

Justice Kabui said: "Such changes in the rates of customs duty do not change the existence of a level playing field for all importers and exporters alike.

"In other words, the rates of customs duty many change but the fact of a level playing field for all importers and exporters remains the same.

"Any reduction of customs duty on any item of goods in the First Schedule applies to all importers or exporters."

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