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Govt asked to defer VAT from Aitutaki

Wednesday 17 February 2010 | Published in Regional

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Aitutaki businesses have asked for temporary deferment of value added tax (VAT) payments. Finance minister Wilkie Rasmussen says government is now looking into the real value and benefits of this proposal.

Aitutaki’s Arutanga/Reureu/Nikaupara MP Teina Bishop, on behalf of the island’s business community, asked that government delay this month’s VAT payment – deferring the payment to a later date or to be paid over time.

On Monday Bishop wrote to Rasmussen suggesting that government could approve the request and allow much needed funds to stay on the island.

The Aitutaki business community reportedly believes the deferred payment would help them with immediate relief and reconstruction.

Rasmussen confirmed he had talked to Bishop over the phone about the proposal but had told him he would have to consult with the right people at the ministry of finance and Crown Law office on its benefits and whether it is possible.

He says government intends to provide a financial assistance package to encourage the recovery of the island’s business community, and extensions of due dates for VAT payments could be part of it.

Government is already encouraging banks to provide grace periods for loan and mortgage repayments for the people of Aitutaki.

ANZ Bank is leading the way by waiving several fees relating to loans and term deposit withdrawals.

“I support the idea of a package of financial or financially related assistance to the business people of Aitutaki to help them thorough this time of difficulty. However, I am advised that the minister of finance does have unilateral authority to grant delay or waive VAT payments.

“But, I understand that it is possible for the collector of revenue to waive penalties related to non-payment of VAT but this does not mean people are encouraged to deliberately not pay this month’s VAT, although circumstances of hardship could be factored into the consideration,” says the minister.

Rasmussen raised the issue with cabinet yesterday as it continues to explore ways to assist Aitutaki’s recovery following cyclone Pat. The minister says the facts and figures relating to the proposed VAT deferment would likely be known by today.