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Minister defends ‘legality’ of tax break

Wednesday February 21, 2018 Written by Published in Politics

Finance minister Mark Brown called the controversial tax amnesty proposed by government ‘bold decision making to reduce tax’ during his ministerial statement in Parliament yesterday.

 

During the second reading of the income tax amendment, Brown said that the tax arrears on the Cook Islands, some which extended back further than 20 years, have been a long concern for the current government.

“We have relied on experts in the revenue management division and the staff in MFEM to manage these arrears and find ways to reduce them,” Brown said.

“However, this has not happened and in our time of government the level of arrears has remained at around $36 million. It became clear to us that some bold decision making in terms of policy decision to reduce the tax, was required if we were to make a dent.”

The initial effort of the tax amnesty occurred in August, which they deemed insufficient to make a significant dent.

Which was when the government made the decision to provide legislative amendment to essentially waive all taxes owed from the period of January 2010, going back, which would remove a burden from over 200 companies and 1000 Cook Islands people, Brown said.

Many of the companies are no longer in operation, and an undisclosed amount of people have moved overseas or have since passed on.

“This leaves the tax arrears from the period of 2010 to this current period for the Revenue Management Department (RMD), which has tripled in size, to concentrate its efforts on,” Brown explained.

“It is also the opportunity for Cook Islands taxpayers to concentrate in getting their accounts in order from this more recent period.

“It is about forgiveness, and is about providing people with a fresh start.

“Everyone has benefited from the good government policies that have seen increased prosperity in our country.”

Brown also expressed how grateful the government was to those citizens who paid their taxes on time.

He also said that the amnesty was timely, as it was being done to as part of the 50 years of being a self-governing nation.

“53 years now,” MP James Beer responded.

Although some have questioned the legality of the amnesty, Brown said that the discretion to waive taxes and penalties was vested within the legislation, but was vested with the collector of revenue (sic).

“The collector has the sole discretion to provide that way. What this income tax amendment bill does is that it moves that discretion from the collector, and it vests it in the house of parliament, for the members to make a one off decision,” he explained.

“In this case, one in 50 years to waive those taxes.”

While running through the clauses, he mentioned on that indicated that those who paid penalties during the amnesty period, they will be able to claim a credit on any payment made.

“Receive this in the spirit of forgiveness, and in the hope that a number of our people will be able to make a fresh start.”

Minister of Internal Affairs Albert Nicholas seconded the statement, and noted how rare the occasion was.

“This is an event so unique and rare that I would compare it to Haley’s Comet,” Nicholas said.

“So rare that I would even compare it to the chances that the member of Ngatangiia (Tama Tuavera) asking a sensible question at question time.”

This drew a point of order from Beer, which he called undignified conduct, which led to an apology from Nicholas.

He finished by quoting from the bible, Psalms 82: 4, which drew laughter from the CIP members.

“Rescue the weak and the needy and deliver them from the hands of evil. Thank you.”

Long-time Democratic MP Tangata Vavia spoke at the end of the hour, saying that under no situation would he support the bill.

“I will not give my support in passing this bill to legalise and allow the wrong practise by this government, and make their act a legitimate one.”

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