Vanuatu Public Skeptical Of Government's Proposed Tax Plan

Poorly attended public consultation receives mostly negative feedback

By Dan McGarry

PORT VILA, Vanuatu (Vanuatu Daily Post, Oct. 5, 2016) – Reactions to yesterday’s first public tax consultation were supportive but skeptical at best, and outright negative at worst.

The poorly attended event—about 100 people had arrived by the end—featured a lengthy presentation by the government team, and almost entirely negative feedback from the audience.

Organisers agreed with a suggestion that more notice and wider publicity would be required in future efforts. The 1000-seat main hall of the National Convention Centre was barely peppered with attendees, most of whom sat quietly and listened.

The tax team presented a lengthy outline of the tax plan, largely consisting of materials contained in their consultation paper, which is available for download from the Revenue Review website atrevenuereview.gov.vu. The team spoke for a little more than two and a half hours out of three hours allotted for the event. That left time for 7 questions from the public. One of the first commenters suggested that the team spend less time talking and more time listening, an idea that was echoed by others after the event was finished.

Of the seven questions and comments that did come out, six were against the tax. One was supportive of the idea of an income tax, but questioned the government’s ability to collect it.

When she asked how Customs expected to be able to collect tax from the large pool of unregulated cash that forms the bulk of Vanuatu’s low-level economy, civil society representative Anne Pakoa was told that the government would impose a Tax Information Number on every wage earner and business owner.

This, they said, would allow the government to closely track cash flows. The official declined to go further, stating that the details would be spelled out if and when the government actually decided to proceed with the proposed plan.

Taxi driver Elton Worwor raised a ripple of amusement in the hall when he said, “I think you must be speaking the language of the Big Man, because I as a Little Man didn’t really understand any of it.”

It would be easier to bear the idea of paying an additional tax, he continued, if there were some evidence that the tax money being gathered already were being spent well. “Some islands are no good at all,” he said. “No roads, no phone service, no wharves....”

Local business owner Nicholas Ritsinias told the team that he had calculated that Australia employs income tax collectors at a rate of nearly one person for every 800 residents—over 23,000 in all. These are dedicated solely to income tax collection, he asserted.

Mr Ritsinias appeared to be referring to the number of employees at the Australian Tax Office, which employed 23,259 workers as of June 2014. Its annual budget was nearly $AU 4 billion in 2014.

Vanuatu would need to hire nearly 300 more tax collectors to reach the same level of representation, he said, and concluded that “income tax is for rich countries.” He added that he hoped that Vanuatu wasn’t being pressured into accepting a revenue solution that was inappropriate for a developing country.

The question of debt forgiveness was raised with the team, who responded that this was a matter for politicians to raise with development partners, but that the economic climate was not conducive to such options. In June this year, a senior Chinese foreign affairs official told the Daily Post, “China will not force Vanuatu to pay its debts.”

Only one person the Daily Post talked with was encouraged by what they heard yesterday. One commenter did say that what he heard at the event was enough to confirm to him that he should oppose the proposed tax plan.

Prior to taking questions, public relations officer Kiery Manassah told people that their comments on the proposed plan should be sent no later than November 15th. This is the first clear indication of the consultation timeline.

Vanuatu Daily Post
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Comments

Well written article. Vanuatu should encourage both local and foreign investment to greatly advance the country economically. The proposed Government tax plan will no doubt reduce investment, and for some people will reduce their incentive to work. As a principle of fairness, it doesn't seem fair to essentially tax the employed from Efate and Santo in order to pay the school fees for the entire country. In terms of funding for education, there should be more local community support for the teachers of their children, and for the needed classrooms. Books, materials, equipment and teacher training should be centralized to maintain a high degree of quality, yet overall financial support should flow both down from the central government and up from the grassroots. If you are hungry, you can't just sit and wait for someone to feed you - you need to be active in the field. Perhaps the government should evaluate the use of its major assets, and determine their optimal utilization. For example, can thousands and thousands of trees be planted on public lands to secure large revenues for the future?

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