Tax reform, positive ecosystem both important to growth: Wale

Leader of Opposition, Matthew Wale
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OPPOSITION Leader, Matthew Wale says tax reform and a positive ecosystem are important to create growth in agriculture, fisheries and forestry and attract investment.

Speaking in response to the Speech of Throne in Parliament on Wednesday, Wale said high taxation in the country remains an impediment to serious investment that would unlock opportunities in these sectors.

He said tax reform has been on the cards for the last 20 years and there has been very little movement on any of it.

“What is the problem, may I ask?

“It would seem to me there is an irrational fear of the unknown, or perhaps a fear of government losing revenue in the short term,” he said.

Wale said this matter requires a rational approach that accepts an immediate short-term reduction in government revenues as it streamlines taxation.

He said it is important that government keeps its eyes on the long term benefits of such reforms to motivate and guide the tempo and direction of tax reforms.

Further, fiscal incentives are a key catalyst to investment.

Wale said Government must not fear this.

“However, there is a need for certainty on such incentives, and clarity and transparency around the process and timing to obtain them.

“The ad hoc manner fiscal incentives are handled at present does not give certainty to business and investment and makes decision making arbitrary,” he said.

Wale said there is too much discretion left to certain individuals, and nothing to clarify to business what is permissible.

“Decision making takes too long. Lack of certainty, lack of transparency and delayed arbitrary decision making are serious impediments to creating a sound stable business environment to attract quality investments.

“Worse, they are more likely to encourage corruption as businesses are put in the situation that they need to induce these things to happen,” he said.

Wale said this is the current quagmire we have at present, and it is choking off growth in the economy.

He said there needs to be serious, substantive, efficient reform in these.

Furthermore, Wale said an ecosystem that attracts, encourages, supports, and facilitates business enterprise must be a deliberate policy target of the government.

He said access to finance continues to be an issue.

“DBSI will go some way towards addressing this issue but much more needs to be done.

“KYC requirements make it difficult for a lot of businesses and individuals to open bank accounts. This is really an unnecessary impediment,” he said.

Wale said there must be more common sense in this matter.

He said Government must liaise with the central bank on this matter.

“Access to land is another important factor.

“I note government’s land reform objectives. I grant there are structural issues involved in land reform that need to be handled with care,” he said.

Wale said the current stamp duty on land transactions is another issue affecting refinancing of businesses, and needs to be reformed. It places an unnecessary cost on what ought to be simple business transactions.

He said business advisory services, financial services, extension services, efficient trade disputes resolution, predictable transportation services, better quality communication, and infrastructure are essential components of a sound business-friendly ecosystem.

“Solomon Islands has been described as an expensive investment destination.

“That is why Tina Hydro is costing three times than it should, as an example. It is important that the services available in an ecosystem are not excessively priced,” he said.

Wale said the services currently available to support business are excessive and expensive. Reforms must address this.