3 Mar 2010

Tongans warned of service cuts as tax take dives

2:59 pm on 3 March 2010

Tongans have been warned there'll be significant cut backs in some ministries in this year's Budget as the government tries to cope with a big drop in its tax take.

The country introduced a consumption tax three years ago but returns are not as high as expected, while government income has also been affected by the global economic crisis, lower imports and remittances.

Our correspondent, Mateni Tapueluelu, says the Finance Minister Afu'alo Matoto, has this week warned government departments they face cut backs of between eight and 20 percent.

He says public servants have also been called on to trim spending over the remainder of the current year.

"The target usually is 170 to 180 million Tongan pa'anga by this time of the year but they have said that so far they have collected only 130 million. And therefore the Minister of Finance has appealed nationwide to all the Government ministries to spend wisely and just to pick the vital services."

Mateni Tapueluelu reporting from Nuku'alofa.

The budget is likely to be presented next month.