Business confirms tax exemption from GNUT but denies any revocation as claimed by Finance Minister Ramofafia
BY IRWIN ANGIKI
It appears Finance Minister Rexon Ramofafia was not telling the truth when he said he had revoked the tax exemption he had granted to one of GNUT’s ‘friends’ last week.
The tax exemption was granted to BS Pacific Resources for 4.5 million litres of fuel on April 23, and is estimated to cost the government more than $6 million in revenue.
BS Pacific Resources, speaking to Island Sun yesterday, said it has not received any letter from Finance Minister Ramofafia advising the revocation of their tax exemption.
The tax exemption was received the same day it was signed by Minister Ramofafia, Thursday last week (April 23), Ms Rabataua Tarakabu of BS Pacific Resources told Island Sun yesterday.
Peculiarly, BS Pacific Resources has not received any formal notice of the revocation which Minister Ramofafia claimed he had signed the next day, Friday, April 24.
Sources within the Ministry of Finance, speaking yesterday to Island Sun on condition of anonymity in fear of losing their employment, said they are ‘not aware of any revocation to any tax exemption signed by the Minister last week’.
“If there was any revocation, we would know,” they said.
Ramofafia has not responded to attempts by Island Sun for comments yesterday before press last night.
Yesterday Island Sun reported that the Government for National Unity and Transformation (GNUT) has been issuing out tax exemptions to certain businesses described as its ‘friends’.
One of these tax exemptions was signed on Thursday last week (April 23) to BS Pacific Resources giving the business a 100 percent tax rebate for 3,600,000 litres of Diesel and 900,000 litres of Petrol.
This is equivalent to more than six months worth of fuel and estimated to give the business a clear profit of more than $10 million. Major fuel stations in Honiara on average sell out 200,000 litres of fuel per week.
Given that GST is 15 percent, government is foregoing more than $6 million in tax revenue from this single tax exemption.
Finance Minister Ramofafia when sought for comments on Sunday told Island Sun that he had revoked this particular tax exemption the next day.
“I had cancelled that tax exemption on Friday. A lot of fuel stations had applied for tax exemption.
“After signing the tax exemption, I later realised that it is not good to just give tax exemption to just one company since a lot of them had applied for tax exemption. So, I cancelled it.
“Only Markwarth and SP Oil have been granted tax exemption under GNUT strategy. We will issue a press release on it,” Ramofafia said.
BS Pacific lowers fuel prices according to tax exemption
BS Pacific Resources runs the BSP fuel station in Auki, Malaita province.
Rabataua Tarakabu, sole registrant of BS Pacific Resources, told Island Sun in an interview yesterday that they have lowered their fuel prices in their Auki fuel station yesterday according to the tax exemption they received from GNUT.
Ms Tarakabu denies receiving any revocation from Finance Minister Ramofafia.
“Our new prices effective this morning [yesterday, April 27] are diesel at $13 per litre and petrol at $12.40 per litre,” Tarakabu said.
Old prices were $14 per litre for both diesel and petrol, she said.
Tarakabu said BS Pacific Resources had applied for tax exemption for the benefit of Malaitans.
“The tax exemption was purposely to help fisheries and transport for the people of Malaita,” Tarakabu said.
“BS Pacific Resources does not benefit and profit from this exemption. We also applied legally for this exemption.”
Tarakabu insists that BS Pacific Resources was an incorporated company, and not merely just a business name.
However, the Company Haus records does not show that BS Pacific Resources is an incorporated company, rather a business name only.
Tarakabu declined to comment when asked of BS Pacific Resources’ reported connection with GNUT.
This tax exemption unfair and raises more questions than answers
Fuel stations are calling out GNUT over this ‘unfair’ tax exemption and pointing to key issues which make this deal look dodgy.
First, they need to see an official document stating the finance minister’s revocation of the tax exemption to BS Pacific Resources, otherwise Ramofafia is covering up his exposed corrupt dealing.
“Unless I can see proof of that revocation from the Minister with respect to that rebate then I would certainly be, on behalf of Solomon Motors, would be certainly seeking further legal advice as to whether that rebate would be appropriate given the current scenario with the whole issue with pricing,” owner of Solomon Motor, Honiara’s largest fuel retailer, Craig Day said in an interview yesterday.
If GNUT is trying to help a local business mitigate the global fuel price crisis then they should be helping all the businesses, Mr Day said.
Secondly, the tax exemption does not add up with regards to the volume and given timeframe stated in the tax exemption.
It is impossible to sell off 4.5 million litres of fuel within six months from just that one outlet in Auki, Mr Day said.
Furthermore, how does Minister Ramofafia calculate the given timeframe in the tax exemption instrument, which is roughly six months if the whole matter was to mitigate against the war in Iran impacts. Because it is not known when that war will end, it could be in two weeks or two years, Day said.
“But how do you help someone if you don’t know what the problem is and how long it’s going to go on for? So, the whole decision-making with respect to the volume and the time frame is just a complete nonsense. That doesn’t take away the epic nonsense of avoiding the policy lever of applying the rebate to the wholesale level.
“How can the Minister consider that the rebates would apply at the retail level because in fact it’s the wholesaler who charges the retailer the goods tax. So, the retailer as such doesn’t get charged by the government. The goods tax of 15 percent is actually charged to the retailer by the wholesaler whether that be Markwarth or SPO,” Day said.
Meanwhile, business pundits have echoed similar sentiments.
“Other genuine local business houses that are properly incorporated have been asking for exemption but were never given exemptions.
“You have to show your financial statements, prove how much have you contributed to the economy to justify your request for exemption,” they said.
Photo: Supplied
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