Transcript
The tax reforms would have already kicked in by now had the government had its way last year.
However because of vehement opposition from the private sector, and caution urged by the international labour organisation, a review of the plans were commissioned.
Now completed, this review was submitted to the minister of finance Gaetan Pikioune last week.
However, the International Labour Organisation's regional wage expert Daniel Kostzer who raised the initial concerns about the proposed reforms in Port Vila nine months ago, says government has ignored most of the recommendations and the reviewed plan is almost identical to the original.
Mr Kostzer says the government has also ignored an important issue in relation to the proposed flat rate tax on workers wages.
He said the government's proposal does not discriminate between single workers and workers with multiple dependents.
According to him, this is unfair in comparison to the proposed corporate tax.
"Because the businesses they are taxed on the profits. That means that after they spend the money. In the case of the wages the income tax is going to tax them before they start to spend the money. Independent of what they are going to do with the money so we think that is a very unfair situation for workers."
But it is the Vanuatu business community, not workers, who have been most vocal about the government's proposed tax reforms, which are aimed at increasing government revenue.
The general manager of the Vanuatu Chamber of Commerce Astrid Boulekoune says they too are dissappointed that the government has not taken their views into consideration.
"It is very frustrating and difficult for businesses here in Vanuatu because now we know that whatever positions or proposals that the government put forward it's not going to be taken into consideration."
The private sector have proposed a series of alternatives to income and corporate tax that they say will help increase government revenue.
One of the main ones calls for the government to simply increase the existing Value Added Tax from 12.5% to 17.5%.
Mrs Boulekone says the reasoning behind this was that everyone who pays for goods and services in Vanuatu can contribute to government revenue.
"There are initiatives or ideas that we have put forward that should be taken on merit and being taken into account but essentially this has not been done."
But not everyone is convinced that the Vanuatu government's revenue problems will be addressed by simply raising the value added tax.
Dan McGarry the media director at the local newspaper the Vanuatu Daily Post has been going through the reviewed version of the tax plan.
He says the gaps he sees in the report are the government's failures to include GDP projections, impact on the consumer price index and employment figures.
"Now these are very difficult things to calculate in an economy that features so much informal activity but at the same time you know if they are going to stand by and hand on heart say that you know we know our revenue projections are good and yet refuse to say with any certainty what the GDP is going to look like or you know what unemployment or inflation are going to look like then again you know that calls into question just how firm their revenue projections are."
The ILO's Daniel Kostzer says another major issue with the government's projections is that they are based on data from before 2015 which he says is unrealistic given the widespread destruction wrought by Super Cyclone Pam in March that year.
In the final review of the proposed tax plan the government states that the reforms aim to broaden the revenue base, reduce the cost of doing business, lower the cost of living and the cost of capital to support investment and economic growth.
It also lays out the aim to reduce import duties over five years, and modernise tax administration in order to have fair, transparent and effective revenue collection.
No one is disagreeing with the need for these things in Vanuatu. What people are opposed to is pushing through reforms without at least attempting to understand the impacts those reforms will have on the country and its economy, still recovering from one of the most powerful and devastating cyclones the region has ever seen.
