Giving revenue buoyancy

NEW tax-free zone (TFZ) legisla tion and a general goods and services tax (GST) are under consideration by the interim Fiji govern ment. Trade and Commerce Minister Berenado Vunibobo foreshadowed both moves at a recent congress of the Fiji Institute of Accountants.

The minister said a new TFZ decree would be ready by the middle of the year, but that it would not affect com mitments already made to companies operating in the country. A draft of the decree had been prepared and circulated to the relevant ministries for comment.

Vunibobo said a GST measure would maintain revenue buoyancy and recon cile the requirement that taxation did not distort industrial incentives and poli cies. The rationalisation of the industrial tax structure, including duties on raw materials and capital goods, excise duties and export duty drawback, was being

given priority.

1 he minister said Fiji would study the New Zealand GST system, under which no sale of goods and services was ex empt. (The only exclusions in New Zea land are for property sales and second

hand goods everything else, including stamps, telephone calls, municipal rates, is subject to 12.5 per cent GST).

The main point of such a tax in Fiji would be to maintain personal and corporate taxes at internationally com petitive levels. “The need for lower and internationally competitive personal taxes is very acute as we witness both the outward migration and the inward movement of technical expertise,” Vuni bobo said. Such a move toward indirect taxation had been recommended by an International Monetary Fund team The accountants heard Inland Re venue Commissioner Tui Mailekai said he favoured either a GST or a general manufacturing sales tax (GMST) because of the wider tax base and low rates com pared with the current system of excise taxes.

Vunibobo added his concern that taxes might be adding to outward migration: in the two and a half years to mid-1989, Fiji lost 39 per cent of its accountants, 26 per cent of its managers, 21 per cent of engineers, 20 per cent of typists and ste nographers, 15 per cent of blacksmiths all to emigration. □