Finance chief rejects claims
The Chief Executive Officer of the Ministry of Finance, Tupaimatuna Iulai Lavea, has dismissed Opposition claims of tax revenue shortfall as wrong.
It comes after Opposition Member of Parliament Afualo Dr. Wood Salele raised concerns about the 2015 First Supplementary Budget tabled before Parliament Tuesday this week.
“We have an appropriation budget that is $9.1 million and revenue is only $8.5million - an excess of $477,000,” said Afualo earlier in the week.
Lavea said this was a misconception.
“There is no revenue shortfall as insinuated by the M.P,” he said in a statement.
“The $477,000 represents savings which have been identified under the Parliamentary Pension Scheme Administration of $400,000 and $77,000 under the Ministry for Revenue."
“These savings are to be relocated to finance part of the First Supplementary Budget."
“To that effect, there is no excess, and the supplementary estimates is balanced with revenue savings equalling expenditures.”
Tupaimatuna claimed members of the Tautua Party have deliberately misled the public recently, with claims that Samoa’s ability to pay debt was not sustainable.
“I would like to assure the public that Samoa is in a strong position to pay back its debts,” he said. “The debt service ratio which is the ratio of debt service payments over G.D.P is the most appropriate measure to determine any country’s ability to pay its debt."
“From the 2015/2016 main budget estimates, Samoa’s debt service payments for 2015/16 amount to $84.1 million."
“With the current G.D.P level of $1.9 billion tala, Samoa’s debt service ratio is 4.4 percent."
"This means for every tala of G.D.P, only 4 sene is used to pay for the current debts."
“This is extremely low and it demonstrates that Samoa is in a strong position to service its debts, contrary to claims by the Tautua Party.”
Tupaimatuna said Samoa’s debts had low interest rates and long repayment periods.
“This means the cost of borrowing to Samoa is extremely low. Without these loans, Samoa’s development would not be where it is now."
“These loans have been used to build schools, hospitals and health centres, roads and bridges, ports, infrastructures, electricity and water improvements, [to] strengthen agricultural development and so forth."
“The returns from these investments by far outweigh the cost of these borrowings because all of these are concessionary loans."
“The recent surge in debt was a deliberate policy directive in response to the need to stimulate economic activity following the global financial crisis of 2008 and the 2009 tsunami. The message is: as long as these loans funds are put into productive investments and generating the expected returns as government has done, than it makes sense to borrow.” Earlier this week, Afualo, the Tautua Samoa Party’s Shadow Minister of Finance, slammed the government for what he deemed an inability to collect all taxes owed to the government.
He said this insufficiency resulted in a budget shortfall the government had to fix with the Supplementary Appropriation Bill (No. 1) 2015/2016.
He said the recorded $432,952 in V.A.G.S.T collected from ministries and corporations was not good enough, and questioned where revenue for taxes on goods and services had gone.
“It doesn’t seem like the collection of tax is in line with policies and regulations."
“If there is one country that has so many taxes, it’s Samoa…about 50 percent of revenue comes from goods and services tax and the rest is from income tax."
“We feel that the revenue collected is not in line with the government spending and chances are they will raise tax by 20 percent next year if we continue on like this.”