Friday, December 07, 2007

Tax evasion

Letter to Editor - 6 Dec 2007, Dr Victor Lal

I fully endorse Allen Lockington's (FT 4/12) analysis regarding the Doctrine of Public Interest and its applicability to the tax-evading Interim Cabinet Minister.

I would also like to argue that Section Four of the Income Tax Act, which demands privacy of the taxpayer's details, does not stipulate anywhere that the taxpayer can swindle the taxman at ease, and for FIRCA employees to turn a blind eye.

If it was so, to recall Prime Minster Voreqe Bainimarama's favourite phrase, "you can shout until the cows come home but..", every taxpayer will continue to swindle the taxman, knowing that the "cow dung" will never stick on his or her face because of the tax law on secrecy.

It is quite likely the Interim Minister and others of similar ilk had been taking advantage of Section Four, believing they would never to caught, nor be exposed to the general public.

It is time they thought thrice, for they could be exposed under the Doctrine of Public Interest, and should be, especially when the interim regime has been no respecter of the laws of the country since 5 December.

Since when has the interim regime and its cheerleaders, have discovered the rule of law when it is affecting one of their own?

What's sauce for the goose is sauce for the gander. Even the Minister could be exposed under the Commodore's Doctrine of Necessity, for it is necessary to put a stop to tax evasion, and to publicly expose the tax evaders, especially those in high places.

Victor Lal

Letter to Editor - Budget Defence by Illegal Minister; 6 Dec 2007

I write in response to claims that the education and health allocations have been reduced in Budget 2008. Let me assure the nation, that any perceived reduction is illusory only as there is no cutback in real value terms.

There is, for instance, a reduction in VAT allocation of $24-million in the case of the education budget and $5.8m for the health budget.

Otherwise the difference in 2008 operating expenditure compared to the 2006 allocation is due to a cutback in abuse, wastage and a trimming of administrative costs such as phones, travelling allowances etc. This has been done across the board for all ministries.

In 2008, the budget allocation for education is $296.5m, with operating expenditure at $288m. This compares with $323m in 2006, with actual operating expenditure at $293m.

In addition to the cutback in VAT in the 2008 Budget, the operating grant to USP was slashed by $2m in view of the fact that $7.2m of government grant to the institution is under investigation for abuse and mismanagement.

The capital budget for education has actually increased in 2008 to $7.2m from $6.5m in 2006, despite the removal of funds for grant-in-aid teachers who have now been absorbed into the civil service. There is a $1m increase in the capital grant to FIT.

Likewise, the apparent reduct ion in the health budget for 2008 is deceptive. The interim administration allocated $139.5m for health compared to the $144m allocated in 2006.

But, a study of the actual allocations will show that operating expenditure in 2008 is $126m as against $121.7m in 2006.

Likewise, capital expenditure for the health sector has increased in 2008 to $7.8m compared to $6.5m in 2006. This is despite the fact that a major capital project, upgrading works at the Labasa Hospital, is now virtually complete.

The fact is that the SDL Government's health budget in 2006 was boosted by a $16.4m allocation for VAT, not by actual money spent on improving health care facilities.

A close look at the 2008 operating budget for health will show an increase in wages of almost $3m, with allocation for more staffing, another $3m increase for purchase of goods and services and an increase in special expenditure.

This is offset by substantial cuts in the allocation for travel and administrative costs.

So the nation may rest assured that there is no real reduction in the health and education budget for 2008.

In fact, a point that appears to have been ignored by analysts generally is that in the 2008 Budget, the interim administration has restored the per capita grant for primary school students, that was abolished by the SDL Government.

This alone should go a long way in easing financial constraints faced by school management and the hardship faced by many parents in sending their children to school.

The interim Government is very mindful of the need for more funding in the social sector. The economy achieved in Budget 2008 is through a clamp down on corruption, wastage and abuse, rather than at the expense of actual delivery of services.

This is what good governance is all about.

Mahendra P. Chaudhry
Minister of Finance
National Planning
Sugar Industry

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