Government plans nationwide consultation on taxation and revenue

tax Vanuatu

There will be a nationwide consultation on tax reform this month. Government has admitted that it is true that there are some good revenue initiatives in place such as VAT, business licence fees and import duties, but the core issue is even with existing revenue sources, Government is still unable to meet the demand for services by the people of Vanuatu.

Government says the implementation of an income tax will greatly reduce other taxes such as rent tax, business licences and turnover tax. It says this will balance the tax burden while also attracting investors. All this was advised in response to the Opposition Bloc’s weekend call for Government to consider other revenue measures, not just income tax and corporate tax. The Government further confirmed that it will embark on a nationwide consultation on personal income and corporate tax before the end of September.

The Revenue Review Committee (RRC) is now finalizing a consultation paper which will guide the reform, and the consultation will be based on the research and findings of the RRC conducted over the past months in preparation for the upcoming reform. Dialogue with several donor partners to assist with the reform has already garnered some positive responses.

Income Tax Services Impact. Government says the revenue raised from this reform will target free education and health services. Infrastructure, productive sector and security will be considered if there are adequate resources. The structure of the Department of Customs and Inland Revenue has set aside funding for staff to undertake income and corporate taxation work. Modernisation of the Department is proceeding, and cost cutting measures are in place.


5 Comments on “Government plans nationwide consultation on taxation and revenue”

  1. I Calvert says:

    Income tax unfair when people already pay unreasonable expenses, should be wary of govmts ability to double up on taxation when real need is private enterprise and small business development.

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  2. Nasimal ( Nasingamelip ) says:

    To reduce some of the government financial plug hole, I thought our Parliament is over manned compared to our population. The 52 seats parliament must reduce to 42 MPs. Ensure GP doctors work in each hospitals and that would help saving in a long term for our government and our poorest populations. Thank you.

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  3. phoebeann60 says:

    “Government is still unable to meet the demand for services by the people of Vanuatu.”

    Not unusual. Governments everywhere will always be unable to meet the demand for services by their people. The key is to strike an equitable balance between taking and giving.

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  4. Bill Howard says:

    Several studies have concluded that a 1% debit tax on all bank withdrawals would easily provide an income stream for government.

    The only complaints in Australia were from big companies (who don’t pay tax) and the banks.

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    • dailyvanuatu says:

      Good idea, and more a more equitable proposal than the Govt’s initial idea of an tax threshold of Vt500,000. This strikes us as thoroughly unfair; low income earners already pay a disproportionate amount of their earnings as VAT, a threshold above Vt1,000,000 or higher would be preferable. Some other ideas: drop the VAT to 7 or 8%; add an additional 1-2% to the fees levied on offshore transactions, and add a 2-3% on bank transfers going to the overseas owners of businesses that operate in Vanuatu but are domiciled overseas. And perhaps institute an internationally competitive company tax on medium and large businesses of 8-9% (Cue the whinging from the barely-taxed businesses in 3… 2… 1). Of course, better revenue collection, better enforcement would also help.

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