SICCI, as the peak body representing the private sector, has always advocated for tax reform and the review is a step in the right direction.
“Our tax system is too reliant on a single commodity and imposes high tax burden on businesses and individuals, thereby restrictive growth prospects for individuals and the economy,” says SICCI CEO Dennis Meone.
“The review is welcoming and would pave the direction for changes to the tax system.”
He said SICCI welcomes the appointment of a Tax Review Consultative Committee (TRCC) and the inclusion of the private sector, statutory bodies and Civil Society Organization (CSO) and other interest groups in the consultative committee.
SICCI Chair, Jay Bartlett commends the government for its vision and for being inclusive in its approach.
“The involvement of the private sector and other stakeholders reinforces the willingness of the government through the Ministry of Finance to collaborate with important stakeholders in working together and explore policy solutions that are tailored to our context,” says Mr Bartlett.
According to a Tax Review discussion paper by MoFT, the current tax structure in Solomon Islands constrains economic growth and limits the pace of development.
“The current tax system imposes a very high tax burden when compared to other Pacific countries (with tax revenue accounting for 32 per cent of GDP in 2016) and the structure of the tax system is outdated, inefficient, complex, expensive to administer and anti-competitive.
“The tax system imposes high compliance costs on taxpayers and encourages unproductive tax avoidance and evasion activities.
“Moreover, it does not actively support growth - for example, it does not systematically support exports and instead relies upon distortionary exemptions for exporting industries.”
A comprehensive tax review will examine problems with the current system and seek solutions to deliver a tax system that will promote economic growth.
“This will be a fair, simple and broad-based tax system, which ensures everyone who is liable to pay tax, pays the correct amount,” says the report.
The tax review will be undertaken in a staged approach over three years.
• Stage 1: Review of Tax Administration Arrangements and Consumption Taxes
• Stage 2: Review of Income Tax
• Stage 3: Other Taxes
The varying sectors involved would be subjected to consult and forward their proposal to the Tax Review committee who can submit recommendations directly MoFT.
SICCI will hold its consultation with the business community this Thursday 7th September at the Heritage Park Hotel.