It is not the sort of newspaper headline you want to see, if you are a Government tax collector, especially when there’s a concerted effort to get Samoa’s working class in both the public and private sector to pay their taxes.

But the article (Airline owes $2 million in taxes) in yesterday’s edition of the Samoa Observer confirms, yet again, how the financial woes of the State-owned airline Samoa Airways continues to impact the Government many years later.

The article reported that income tax valued at SAT$2 million deducted from airline staff's payroll over the years remains outstanding and is yet to be paid to the Ministry of Customs and Revenue.

Staff who were employed by the national carrier since 2019 initially raised issues with the airline deducting P.A.Y.E. from their payslip but those monies were never paid to the Government. 

The Samoa Airways interim Chief Executive Officer, Fauoo Fatu Tielu confirmed the airline still owes those unpaid taxes to the Government, but “not to employees”. 

“It still shows in company books that money owed of about $2 million,” Fauoo said in response to questions from the Samoa Observer.  

Asked why the company didn’t pay tax owed to the Government, the airline's interim C.E.O. said it was clear the airline didn’t have the funds to do so. 

Despite not settling the outstanding taxes, the airline has no plans to pay up soon, and is instead giving priority to debt repayment to other non-government agencies. 

“If we pay with the current fund the company won't be able to run its current operation,” Fauoo said. 

“We can pay later on but not soon as we have to prioritise non-government debt.”

Fauoo added the airline is liaising with the Ministry of Customs and Revenue on the matter and are aware of this. 

We think that it is preposterous SAT$2 million in personal income tax remains outstanding and is still owed to the Government. And the fact that the national flag carrier is unable to pay these taxes is a tragedy in itself.

While we acknowledge that these are legacy issues from the airline’s former management under the Human Rights Protection Party (H.R.P.P.) Administration, it is clear there is a mountain of work that the interim C.E.O. and his team will need to work through in their bid to restore Samoa Airways’ financial health.

Which brings us to the next question and that is how much more debt does the airline have with other organisations, either private or public-owned and do Fauoo and his team have a timeline on when they expect the debts to be extinguished?

We ask this question seeing the reference by the interim C.E.O. in his interview with this newspaper to the airline focusing on debt repayment to non-government agencies. 

So our follow-up question is whether those non-government agencies include private companies? And if they were “service providers” at that time to the national carrier, what were some of the services rendered at that time whose payments remain outstanding to this very day?

At the end of the day, Samoa Airways as a business entity had an abysmal financial track record, and together with its high operational costs which impacted the Government’s balance sheet, becoming a debt burden to the State.

The multiple cash injections by the former Government, to prop up the national carrier and keep it operational, came at a big cost to the public which included investors in public investment vehicles such as the Unit Trust of Samoa (UTOS).

It is not known if Samoa Airways was able to repay multimillion tala worth of loans from the UTOS which included SAT$15 million that was given in 2018. But the fact that the former Administration continued to get a State-owned financial institution to prop up an ailing airline – without any sense of accountability to UTOS investors and the general public – confirmed the vulnerability of State-established investment vehicles.

While the role that air transport plays in Samoa and other Pacific island nations in connectivity, trade and tourism cannot be downplayed, the millions of tala that the previous Administration expended on Samoa Airways should not be trivialised.

At some point questions should be asked by the Government and citizens on the viability of operating an airline for a small and vulnerable economy like ours, and the long-term financial cost and implications for the nation.