FIA disappointed over tax review proposals
The National, Copyright 2000
November 11, 2000
THE Forest Industries Association has expressed disappointment over the reported recommendations of the Taxation Review Commission presented to the Prime Minister last Thursday.
The Commission has accused the forest industry as evasive in its tax responsibilities.
FIA executive officer Robert Tate said in a statement yesterday: "It is entirely possible that the Prime Minister, Parliament and the public are being misinformed as to the real position of the forest industry and its ability to any longer be of any significance to the economic development of the country."
He specifically referred to the reported non-payment of corporate tax by industry participants and said that submissions by the industry, which questioned the accuracy of the Internal Revenue Commission's records of payments, have been ignored.
The FIA contends the IRC records may not be complete or correct.
"The Review Report mentions that only K21.7million had been paid by companies throughout their corporate lives. The FIA held evidence that in the case of only one corporate group, the record showed a total of K29.8 million in tax paid," said Mr Tate.
"The same group had paid over K2.1 million in salary and wages tax in 1998 while the Tax Office figures recorded only K1.7 million."
Mr Tate said in another example, one company paid K450,000 in wages tax in 1998 while the IRC records show no payment.
He said in presentations to the Review Commission the FIA had presented these figures, and many other examples of incomplete data.
However, the Commission seemed unprepared to review the IRC records or to reveal the basis of its findings.
"The lack of transparency and open dialogue in the Review process was extremely disappointing," Mr Tate said.
"It seemed as if the conclusions had already been decided before the Review began. It is of utmost concern that the Review's recommendations appear to based on incomplete and inaccurate data.
"Evidence of the significant decline in output of the forest sector, the lack of any new or replacement investment in existing forestry projects, and the total absence of any new projects since 1991 under the FMA process, was all discounted under the Review.
"The recommendation to yet again increase export tax rates while ignoring the crippling effect the collapse of the kina has had on industrial output, can only indicate that economic development and employment creation in the forest industries are not a consideration.
"FIA member companies remain willing to engage in meaningful dialogue with Government in order to progress the many developmental issues involved in the forest sector.
"However, there is little evidence that this will ever happen. The Review's recommendation that all matters of importance to the sector be determined by yet further consultancy studies to be done again by the World Bank, contributes nothing to investors' confidence nor to overcoming our reputation as the least viable investment destination in the Asia-Pacific region."