Mr Houenipwela said the government
through his ministry will continue with efforts to take prudent and responsible
steps in the management of its finances for the remainder of this financial
year and beyond.
He said the measures will involve
exerting greater control over spending and exercising careful consideration in
the assessment of applications for new exemptions from taxes and duties.
“Exemptions from tax or customs duty,
when granted, have a significant impact on the level of revenue that Government
can collect and consequently, the amount of money it has available to meet the
expenditure needs of the country,” he said.
The Minister said some exemptions
reduce revenue in the short term but the long-term effect may be positive if
thriving businesses contribute their fair share of taxes.
“However, that long term effect is
uncertain and the government is facing severe constraints right now on its
ability to spend on the basic needs of the country.
“To maximize revenue collection,
action must be taken now to limit further loss of potential revenue through
closer scrutiny of applications for discretionary tax and duty exemptions.”
Mr Houenipwela said he understand
there are many who will welcome the announcement, while others will be
He added that applicants must clearly demonstrate in support of their application, the benefits which the Solomon Islands will derive should an exemption be granted.
“These benefits must be more than
incidental. So an application which merely serves to ensure an applicant would
enjoy greater profits is unlikely to succeed.
The Minister said each application for exemption from duty and tax must be assessed and considered on a case by case basis, bearing in mind the constraints in revenue collection now faced by the Government.
He assured people that the Government has no immediate intention to amend the law to remove the statutory exemptions from tax and duties.
“This announcement relates only to
those exemptions which are available only at the discretion of the Government.”
He also noted that there are some
investment proposals currently being developed for which Government has given a
firm commitment to provide assistance through tax or duty concessions.
“The Government intends to honor those commitments because they are for projects of national significance that will have long term benefits for the country, not only in terms of future revenue, but also in terms of the provision of essential infrastructure.”
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