Uproar In Cook Islands Over Coca-Cola’s Import Duties

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Possibly illegal deal may impact regional perception of islands

By Bruce Hill

MELBOURNE, Australia (Radio Australia, Feb. 5, 2013) – Cook Islanders have reacted angrily to reports a company that imports Coca-Cola there has been paying a reduced import duty.

The lower duty has allegedly been in place since the 1980s.

New Zealand-based Investigate Magazine has labeled the Pacific dependency 'the Coke Islands' in a report which also examines whether local officials turned a blind eye to the practice.

It says the deal was dreamt up in the 1980s by the local importer, was unavailable to any other importers, and had gone unchecked until 2009.

Journalist Ian Wishart says the story has touched a raw nerve in Cook Islands.

"This story, and the amount of money that may be involved in being sucked out of the Cook Islands taxpayers pockets through beneficial deals for big business, obviously, it has an impact on the average Cook Islander," he said.

"They're looking at it and saying 'I've been paying taxes all these years, I'm not getting special breaks, I'm having to pay more for schools and health care and so forth, and the government's telling me we've got no money, and here they are giving all this money to a particular business.'"

Mr. Wishart says given Cook Islands strong ties with New Zealand and Australia, people in Cook Islands are also concerned about the international perception.

"There's an old saying that prophet never has honor in its own home and I think the Cook Islands media could only say so much and as long as there was no international attention from New Zealand or Australia, people felt that perhaps they could get away with it and ride out the storm," he said.

"When New Zealand and Australia media has started looking at this, and, of course, publicizing it, that has an impact on how the nation is perceived."

Cook Islands businessman James Beer says the country had a poor reputation for unusual business practices some years ago.

He says this sort of thing affects the credibility of everyone concerned.

"It comes down to credibility of the government, it comes down to the credibility of the customs, it comes down to people saying 'well, if I'm going to have to pay my taxes, why can't the biggest trader in the country pay his taxes as well?'

"Many people are saying, 'well, was it illegal or wasn't it illegal? And just because a government authority says that it was legal and I allowed it to happen, doesn't make it right'."

Mr. Beer says there is also concern among the people in Cook Islands about any potential impact on aid contributions from Australia and New Zealand, worth around $20 million a year.

"If you look at the situation as it stands now, we have small economy that makes very little money, every dollar, every cent is vital to the National Government to be able to do its roadworks, do its education, do its house programs," he said.

"If we continue not to pay taxes, that area legally obliged to pay, then we have no business asking Australia and New Zealand for aid money."

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