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EAC tackles subject of import excise tax in report to Governor Togiola
In its report to Governor Togiola Tulafono, the Economic Advisory Council says that Import Excise Tax (IET) can be a suitable alternative in the absence of a sales tax, goods and services tax or added value tax, provided that rates applied are both fair for all concerned and evenly charged.
Unfortunately, the Council added, IET has become a simple source of government funding for various projects, and has seen IET increased on an ad hoc basis such as the unpopular soda tax or alcohol tax.
“In isolation these may not matter much,” the report says; “however, potential investors can be confused by the complexity and worried about the potential of IET increasing on goods they import.”
The EAC points out that most successful economies have effectively removed IET and relied more on a sales based tax, despite the difficulties involved in policing this.
“It is the view of this Council that this should be pursued further, despite the apparent complexities in policing,” the report says. “It may well be appropriate to employ additional tax officers to enforce collection which will be funded from the increased revenue that it attracts.”
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