LEADER of the Solomon Islands Democratic Party (SIDP) Mathew Wale says one of their proposed priorities requires substantive fiscal reform to stimulate the economy to create opportunities and jobs for people in the long term.
Wale said these initiatives will require an accommodative monetary policy stance to ensure that gains are not allowed to dissipate but are consolidated.
“Tax reform with a view to reducing tax rates and rationalising the tax system will be a key aspect in our efforts to attract quality foreign investment, and stimulate private investment in our economy,” he said.
He said Solomon Islands has remained the highest taxed economy in the region for too long which resulted in high tax non-compliance and has deterred quality sizeable investors.
“The high taxes have been driven by high and increasing levels of government expenditure.
“This situation is totally unsustainable. Government’s unsustainable appetite for high levels of expenditure has needed to be funded by these high taxes,” he added.
Wale added these high taxes have choked off any real growth in the economy and is a disincentive to creativity and productivity.
He said substantive reform of the economy cannot be meaningful and bear fruit without major tax reform.
“Government must live within its means. This is an important principle to responsible fiscal and economic management.
“Reductions in taxes will mean reduced government revenue and it must also mean matching reductions in government expenditure,” he added.
By IAN M.KAUKUI