Revenue collection this year is expected to improve following the government approval of a number of measures to bolster revenue intake in 2021.
The Minister of Finance and Treasury, Harry Kuma outlined these measures in his budget speech in Parliament Tuesday this week.
First on the list is an increase on Tobacco Excise starting on July 1 this year including introducing a system of taxing the popular home grown Tobacco commonly branded as Lekona. Government expects to earn $24.9 million in additional revenues from this measure. This measure was approved following the completion of a review of the Tobacco Excise regime.
Second is the introduction of the Plastic Tax of 50 cents environmental levy on plastics that are identified as major contributors to environment pollution. Single use and harmful plastics are going to attract this levy.
The increase will generate a minimal revenue of around $1.1 million each year. This will discourage the importation of plastics and encourage using environmental friendly products other than plastics.
Third on the list of these new measures is the Raw Sugar Tax, which the Government will impose levy at the rate of $1.00 per Kg on raw sugar starting on 1 May 2021. This measure is part of the Government’s national strategy in combating non-communicable diseases in the country. This Tax when fully implemented will generate an additional revenue of $7 million per year to the Government.
Fourth is the Soft Drinks tax, which is covered under the NCD policy strategy including soft drinks at the proposed Levy rate of $1-00 per Kg. This tax when implemented will generate an additional revenue of $6 million per year to the Government.
Meanwhile, Minister Kuma said that Non-Tax Revenue fees showed the potential to improve further despite the impacts of the COVID-19.
He said Ministries collecting non-tax revenue need to seriously look into ways to improve and seal off loopholes to collect this much-needed revenue to finance services and boost the fiscal spending to stimulate the domestic economy.
There are also inadequate levies that should be reviewed across ministries to factor in changes in the inflation rate per annum to reflect the cost of providing services while maintaining a level of cost affordability to all Solomon Islanders.
Mr Kuma also said government’s focus now is shifted to use the $US currency, specifically for paying of fees and charges by foreign own companies, more specifically in the fishing industry.
This should help increase the level of foreign reserves to maintain stability in the domestic market, strengthen the value of the SBD currency, and promote foreign investors’ confidence.
The government also agreed to review the current tax regime on mineral exports in 2021 with the intention to impose export duty on the exports of mineral products.