ILO expert reckons income tax more complex than VAT

The International Labour Organisation (ILO) says income tax is more complex and difficult to manage compared to the Value Added Tax (VAT).

Speaking at a public forum at the Grand Hotel in Port Vila, Vanuatu, yesterday the visiting ILO Senior Wage Specialist, Daniel Kostzer said he noted that compliance had been an issue in the implementation process of VAT and pointed out that the income tax would just be more complex than managing the current Value Added Tax regime.

Kostzer said what we need is a household survey and a lot of analysis etc that would give us a clear number of our labour market covering household expenditures etc.

“We don’t disagree with the government’s proposal to introduce income tax and corporate tax but we feel that the process lack elements”, the ILO expert said in a packed conference room.

Kostzer also noted that the income tax proposal could shelf an unfair burden on a small portion of the population whose tax would be providing services for the entire population.

He said the problem is not about the level of taxation as some may imply but is really a lack of transparency and secrecy with regard to the expenditures and the imbalances of expenditures.

In his response, Private Secretary to the Office of the Leader of Opposition, John Shing said the Opposition has all along been questioning government about its proposed income tax initiative, particularly when there was no household survey to base on.

“We are just creating another problem on top of another existing problem,” said Mr Shing.

Joe Harry from the Vanuatu National Workers Union said a lack of legislation on Collective Bargaining Agreement has discouraged negotiations with employers.“This kind of agreement (The collective bargaining Agreement) should discourage decisions that are usually made behind closed doors” he told the forum.

Representatives of the business community have again proposed that the government fully implement the VAT policy by imposing a further increase from 12.5 to 15 percent, instead of the proposed income tax.

Vanuatu's tax system is based on consumption taxes and license fees.

These taxes are primarily import duties, Value Added Tax and fees on licenses and permits.

Most of these taxes are designed to most heavily tax the large business while having a minimal effect on the local population. 

Meanwhile, Government is organising another public forum today at the National Convention Centre to clarify the issues raised.

 

Photo file: Port Vila Harbour 

 

     

Author: 
Harold Obed