Tax cuts needed to boost investment in Solomons - Hou | Pacific Beat

Tax cuts needed to boost investment in Solomons - Hou

Tax cuts needed to boost investment in Solomons - Hou

Posted 25 November 2011, 9:38 AEDT

Solomon Islands new Finance Minister, Ric Hou, says he is confident the government has the numbers to see off today's planned motion of no-confidence.

Despite the political instability, Solomon Islands cabinet met and approved the 2012 budget, late yesterday afternoon.

While Mr Hou says the budget is an immense task and his number one priority, he is also looking to his country's economic future ...and he brings with him a wealth of experience for doing so.

As a former Governor of the Central Bank, Mr Hou, spent many years with his hands on his country's economic leavers, including playing a key role in holding the Solomons finances together during the violence and choas created by the ethnic tensions a decade ago.

Presenter:Jemima Garrett

Speaker:Ric Hou, Finance Minister, Solomon Islands

HOU: Well, I think for future I think it would be good for the investment community here and general investment climate that we should look at our corporate tax, as well as personal tax, because I think all we need to do is give out a signal that tax administration improving quite significantly, which is a very big plus and if that's going to be the case, then we need to be looking at what our tax breaks are going to be for future.

GARRETT: I understand you're also going to target tax cuts for low income earners. Just what sort of difference could that make to them?

HOU: Well, we don't mentioning anything tells us to the figures as what basically I'd be interested to look at is income levels of both low and middle income earners. The idea is to raise the thresholds around people can have a little bit more take home pay and I think that would be of great assistance to the larger community.

GARRETT: When you look at the big picture for Solomon Islands economy, logging exports widely regarded as unsustainable are increasing, rather than decreasing, How much of a problem is this and what are you planning to do about it?

HOU: Well, the logging sector I really don't have to do anything with it, given that I think at the current harvesting rate it's diminishing anyway. So in a couple of years time, the logging sector is definitely going out of the picture and that's going to be a very important issue for the government to be looking at in terms of filling the gap for revenue losses that might be expected from that source. So we need to be looking at growing the economy at least on the same economic base, but widening it and making sure that there's more activity to fill that gap. I think the way the economy is growing, the productive sector has been growing quite fast in the last couple of years. We would like to make that continue, the copra, cocoa and these other productive industries. I think they do have a lot of potential to fill that gap.

The other industry that I think the government is looking at quite aggressively is the hospitality, tourism sector and I think the potential's are quite good as well.

GARRETT: How can you increase support to agriculture and to tourism, while at the same time as bringing down taxes?

HOU: Well, I think when I talk about reducing taxes, I think what we are looking at here is for the low reduction in total revenues in the sense that our tax administration has continued to be very effective. I don't think even lowering tax rates will have too much of an impact. But we need to be investing in these sectors. We have not been doing that for many years and I think beginning next year, the government is going to continue investing and diverting investment in these productive sectors.

GARRETT: Cabinet has just approved the 2012 budget and providing the government is still in power next week, it'll go into parliament. Just how much influence have you been able to have over that budget considering what a short time you've been in the job?

HOU: Well, I was in the previous cabinet, so in some sense I have had some input into it and I think before the previous government under Honourable Danny Philip went down, the budget preparations were quite advanced already, so while we were politicking in the last couple of weeks, having officials who continually checked cleaning up and doing all that. So in a way, yes I have a very, very short time to do this, but the preparations themselves are being quite advanced, so that's a great relief, as you can appreciate. Picking up this role in having to pass a budget only in four weeks is quite a very difficult task. But I'm very, very confident we will be able to meet the deadlines.

GARRETT: How confident are you that your government will still be the government next week?

HOU: Oh, for the time being, I think as of today, we do still have the numbers and I do not think we should be overly concerned about the motion.

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