By Gary Hatigeva
“HAVING compared to neighbouring countries in the region, Solomon Islands has one of the highest costs of living,” says Matthew Wale, Member of Parliament for Aoke/Langalanga and Chairman of the Bills and Legislation Committee.
Presenting his speech on the debate session of the Goods Tax (Amendment) Bill 2018, the Aoke/Langalanga MP stressed that food and transportation, electricity, water, accommodation, basic healthcare system, the basic education and clothing are basic necessities for all families.
He said families are however struggling to make ends meet, as most of the economy does not pay a living wage, and families are unable, on the basis of their income, to meet all the necessities of life.
“Thus, the quality of life is not where it should be. It must be government responsibility to address these through robust and responsible policy.
“Taxation is a burden on the family. No one is arguing that we must not contribute. However, there is a strong case against the arbitrariness of the GST formula – its inclusion of customs duty as the base amount that GST is then calculated on,” Wale said.
He added that the inclusion represents an unjustified intrusion into family incomes, as it represents a cost of government that is unfairly levied on the people, and he suggested for it to be changed.
“And if it is changed, that saving must be passed on to the consumers, and not be hoarded by the wholesalers.”
He further pointed out that this is a result of an overdue taxation system, which needs a complete overhaul.
Wale said such an overhaul must aim, above all considerations, to strike the balance between incentivising or encouraging increased private investment in the appropriate sectors of the economy and efficient government expenditure in reasonable quality public services.
The BLC Chair said this is not an easy balance to achieve, but the country through responsible governments, must strive for it, and such a balance will be demonstrated by the number of quality job opportunities that will be created in the economy over the mid to long term.
“And such jobs should provide a reasonable living wage, and that taken with reduced cost of living will afford families savings and the means to meet the basic necessities of life in our country.”
Meanwhile, in his concluding remarks, Wale stressed that the government needs revenue to fund public services sustainably, and Taxation is the government’s primary revenue raising tool, but this policy must be guided by the principles that contribute to creating a just, fair, and a more equal society.
This bill remedies a loophole in the current Act that allows some wholesalers to evade paying the correct amount of GST.
“In that objective, it is laudable and the House must support it. However, the formula for calculating GST betrays an arbitrariness that is inherently unfair to taxpayers.
“Further, it is a major contributor to the high cost of living in our country. Government ought to review this formula to ensure that these considerations are given adequate weight in the on-going reforms to our taxation system,” the legislator further stressed.