Norfolk seeks a better

shopping deal for tourists

NORFOLK Island’s Government is worried that the territory has lost its competitive edge as a shopping and duty free destination com pared with other South Pacific countries.

It is reviewing its revenue structure in an effort to find ways to lower costs for companies operating in the tourism busi ness. All existing taxes will be looked at; there is certainly no suggestion that in come taxes will be introduced, but some of the existing fiscal measures are clearly not proving effective, such as the annual hairdresser’s licence fee of Asl. The re view will also examine privatisation of some Government functions, such its

monopoly on liquor wholesaling and the

Norfolk Island philatelic bureau.

The first move to restructure the is land’s revenue base was the recent deci sion to raise the Financial Institutions Levy (FIL) from 0.25 per cent to one per cent. The banks forward the re venue from the levy on all financial transactions to the Government once a month now and this is expected to pro duce AS 1.1 million (US$870,000) a year, which together with customs duty of As2.l million (US$l.7 million), provides about 55 per cent of official revenue.

The remainder comes from a range of

government charges.

The FIL increase replaces the public

works levy which brought in only

A 5300,000 a year. Each islander over the

age of 18 years was required to pay the levy (which ran to about As3oo a year) which was intended to produce money to pay for road construction and repairs. It was enormously expensive to administer people could claim they fell below the income threshold at which one qualified to pay the levy and, because there was no income tax system, this was extraordi narily difficult to disprove. There was also a set of allowable deductions which residents could set against their pay ments.

The FIL is more like a value-added tax, and already businesses on Norfolk have begun adding one per cent to their invoices (and listing it separately, just as they would a value-added tax).

But if the FIL is not to make Norfolk Island more uncompetitive, the Govern ment will have to find a way to reduce its spending and thus the burden on businesses which cater to the tourists, most of whom come from Australia and New Zealand. Other destinations offer better priced goods than Norfolk, espe cially in the electrical and liquor lines, although the island can still be competi tive in shoes and perfumes. But when shopping is a major consideration for many who travel to South Pacific des tinations out of Australia and New Zea land, it is important that Norfolk Island retains its image of a good place to pick

up cheap goods. I=l