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NUKU’ALOFA, Tonga (Matangi Tonga, May 5) - After Tonga's squash growers this week became confused over how the new Consumption Tax applied to their businesses, the Minister of Finance has come out and promised them exemption from the tax on agricultural imports.

Within a period of two hours on Tuesday, the Tonga government gave two conflicting explanations on the position of the squash growers with regards to the new tax, which came into force on April 1.

The Tongatapu Growers Association had been waiting for a reply from the Minister of Finance on a petition they presented to him asking for an exemption from the consumption tax on imported agricultural inputs.

On Tuesday evening, the Acting Prime Minister, Dr. Feleti Sevele, who is also the Chairman of the Tonga Squash Council, went live on Television Tonga and told the public that squash growers would not have to pay the 15 percent tax on agricultural imports, such as fertilizers, seeds, boxes and pesticides. He also said that there would be no tax on the charges for the ploughing of the land, nor on the wages of farm workers.

But an hour later, the Revenue Commissioner, Sefita Tangi, who attended a meeting of the Tongatapu Growers Association, told the gathering that squash exporters who were importing agricultural input would have to pay the 15 percent tax at the wharf that was required under the law, and then two months later reclaim it from the Treasury. This was according to a report of the meeting by Semisi Kailahi, a member of the Tongatapu Growers Association.

Semisi said that the association had already presented a letter of petition to the Minister of Finance asking him to exempt squash growers and commercial growers from tax. The Minister had not replied but Semisi was firm that the Association wanted an exemption from tax for the sake of saving the squash industry. He pointed out that there was inconsistency in the application of the tax because if growers bought their supplies from agricultural supply shops and not from squash exporters, they would be charged the tax.

A joint Press Release from the Minister of Finance Honorable Siosiua 'Utoikamanu, and the Minister of Labour Commerce and Industries, Honorable Feleti Sevele, dated May 3, and released to the media today, stated that the government position was that, "squash growers would not have to pay the tax on imported agricultural inputs".

It also declared, "the Revenue Services Department will shortly issue a public ruling outlining the treatment of squash growers and other exporters for consumption tax purposes."

For non-export growers, the press release said that that, "the situation concerning all other growers producing for the local market, or simply for household consumption, has also been considered carefully by the two ministers, and they are looking into appropriate transitional measures and instruments to address their concerns. The Ministers anticipate being able to complete their work on this within a month."

The officials of the Tongatapu Growers Association are ' Aisake Tuiono, 'Uliti Uata, Steve Edwards, Semisi Fonua, Clive Edwards, Siua Tai, Seluini 'Akau'ola and Tsutomu Nakao.

May 6, 2005

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