National Expenditures Needs Tightening Before Income Tax

THE GOVERNMENT MUST tighten up more of public sector expenditures before we can begin to think of introducing Income Taxing in Vanuatu.

As the consultation process continues on this bold government initiative that has got a lot of heads turning we think it is our duty to put something forth on what we think are some necessary steps to take before this ideas becomes a part of Vanuatu’s legal framework.

First of all, if the income tax is going to become a reality then the government, especially the public service sector, needs to effectively manage its collections and spending’s otherwise corruption, or lack of proper management, will reduce the peoples trust in the system.

According to the estimates provided by the Revenue Review Team who are doing the consultation, if the income tax was introduced a huge surplus of revenue will be added into the national treasury.

This will, of course, add surplus to the national budget. But how well will the surplus be managed? That is the challenge that needs to be solved. Because, if we have two to three billion more extra cash then there needs to be a transparent and better management system in place so that people can trust and know that their monies are spend the promised way.

It is of deep concern that tax money, because it is in the billions, could be siphoned away in small amounts into someone’s pocket, or towards unnecessary spending’s.

The administration of the tax system should be fully equipped to fight corruption because such systems are vulnerable. For instance, just this month in Sierra Leone, West Africa, an assessment was made on their tax system by the Budget Advocacy Network (BAN) “with a view to highlight key areas of concerns, reform and opportunities to light the darkened shadows that clouded tax regime in Sierra Leone.”

The BAN is a united front of several NGO’s including Transparency International Sierra Leone (TISL) and its purpose is to ensure “a greater inclusiveness in the budget process, increase access to information and improved responsiveness geared towards achieving gender sensitive and poor budget and programs”.

And in light of this ‘darkened shadows’, this is what their Commissioner of the Anti-Corruption Commission said; “The absence of a fair and equitable tax system breeds corruption…tax management is an attractive sector for corruption to take place as the opportunities and incentives to engage in illicit activities are abundant”.

Moreover, in 2014 the International Monetary Fund (IMF) collaborated with other organizations to address tax administration through an initiative called the Tax Administration Diagnostic Assessment Tool (TADAT) because tax collection “is a central function of government, and weak tax administration can compromise development, growth, and trust in government. Like all government agencies, tax administration face strong public demands for efficient service delivery, operational accountability, and transparency”.

Convincingly, if the tax income is implemented then the administration of those taxes should be corruption-proof.

Furthermore, there are several things that are on the list that needs to be tightened, and one of them is the effectiveness of internal control for non-salary expenditure of which the Vanuatu Public Financial Management Performance (VPFMP) Reports of 2009 and 2013 simultaneously rated a ‘C+’.

In 2014 an economics expert from the University of the South Pacific estimated that approximately over 50 million of unbudgeted vatu are spend on fuel, maintenance, and the purchase of G-vehicles annually.

In that same year, about three months after the 50 million vatu estimation by the economics expert, the Ministry of Finance recorded an increase of expenditure “due to the intrusion of unbudgeted items during the beginning of this year” – Vehicle-replacement cost VT 21.7 million (or 185 per cent) more than what was budgeted for at VT 11.7million, according to the 2014 Half Year Report.

CLICK HERE to visit the Vanuatu Ministry of Finance website.

Strategically, was the unbudgeted VT 10 million spend on the vehicles constructive? Or should that money been used to pay hundreds of students school fees?

The government needs to show more commitment if it wants to tax working citizens by effectively controlling its expenditures, especially those that are not budgeted for. This also means that it is important to avoid political gratuity payments, which according to a Transparency Vanuatu report in 2015, increased by a staggering 18% since 2002.

Furthermore, the VPFMP Report identified that “increased payroll costs and unbudgeted expenditure have raised expenditure levels. In 2009 and 2010, actual revenues were also significantly less than anticipated due to a combination of ambitious forecasts, changes in trade agreements and weak enforcement”.

But it must also be noted that those were reports that reflected the works of previous government, and must not reflect the current government. However, according to national financial information gathered for the 2016 half year report several services have already exceeded their budget limits by a high thousand percent.

The big question to ask ourselves is; if we are trying to raise revenue to upgrade public services and to pay off loans then why are we spending more than what we budgeted?

According to information from the Ministry of Finance the government of Vanuatu has actually spent over VT190 million vatu of unbudgeted funds in the first half of this year on additional vehicles, vehicle hire, acting allowances, court costs, official entertainments and several more.

To conclude, there are mechanisms that needs to be tightened up and unnecessary spending must be stopped because these are the monies that should be used to increase access to areas like the education, communications, health and other services.

It is also important to be mindful of corruption in this sector. In a Working Paper (Tax System: A Channel for Corruption – Or a Way to Fight It?) published by Transparency International in 2015 several main entry points for corruption in taxation were pointed out;

Reporting taxes: This can happen with or without the involvement of tax collectors and through the use of incentives and resources to exert influence (legal and illegal) to allow for inaccurate reporting (e.g. of company turnover and/or expenditures and/or individual earnings).

Collusion: Tax officials take advantage of their authority to issue tax exemptions or levy lower tax rates for individuals or companies, creating a context of policy capture.

Patronage: Ties of community or kinship may favour or penalise certain constituencies, such as by lifting certain exemptions, imposing additional levies, or unevenly enforcing tax compliance.

International tax fraud and evasion schemes: Opaque global financial systems exacerbate the problem through legal and illegal channels and often use tax havens as part of the process. Weak legislation, legal loopholes and the breaking of laws often permit companies not to pay taxes where the profits are made, and instead shift these monies to other jurisdictions with lower tax rates. As the World Bank President recently stated, such company actions are a form of corruption.

All of these issues can be classified, either directly or indirectly, as forms of tax evasion.

Overall, Transparency Vanuatu recommends that existing policies need to be tightened to protect national revenue and enforce better management of public assets because they cost a lot of money. And if we are to pay taxes we would want to know that our monies will be put into raising the quality of life in Vanuatu and not to pay off unnecessary subjects, and for this to happen the government has the important task of convincing the people to trust that this proposed system will work.

Lastly, Transparency Vanuatu wishes to commend on the string of public consultations that has been undertaken by the Revenue Review Project Team, it is a challenging task, it consumes energy and time, but it must be done. Everything that will go through parliament must go through a participatory consultation process so that everyone is aware of, and participates, in shaping Vanuatu’s future.

 

 

Wider Radio Coverage Is The Peoples Interest

Picture this; in a rural community somewhere in Vanuatu an elder walks to a small home-store and buys two new batteries for his small Panasonic red radio. Back at home he places the batteries into the battery slots, and then at the end of the radio antenna he ties the end of a copper wire, the copper wire is then firmly tightened around a long bamboo pole nailed onto the side of a mango tree by his son.

The other end of the wire is then expanded as an extension of the radio antenna from the bamboo pole, it reaches high into the air trying to capture every bit of radio transmission.

He turns on his faithful old radio that has been informing him for the past several years, and begins to tune in to the national radio station. But he is not the only one tuning in, across the country hundreds, or if not thousands of radios, are turned on and are tuning into the same station.

They are all listening to another Ordinary Session of the Vanuatu Parliament, because in a democratic state like Vanuatu everyone has the right to be informed of the laws that are being discussed in parliament. Listening to an ongoing session of parliament also provides the incentive for voters to check on the participatory efforts of their parliamentary representatives: Are they speaking up? Are they representing our views? Or are they doing otherwise?

The recent blackout from the national broadcasting service did more than deny the people their right to listen to what was being discussed inside the parliament, but it also revealed years of operating under a heavy load of financial burden.

The right to access accurate information is a fundamental interest that is now being promoted more than ever in Vanuatu. And with new communication devices being introduced in the country people are now getting connected more than ever in the history of Vanuatu. It this therefore important that all public assets that are dedicated to disbursing information to must be at their best at this time to ensure that the people know what is happening around them, and why they are happening.

Clearly, years of vying for political positions and power has made it difficult for many public companies to operate without facing some sort of financial or organizational challenge.

With radio there are still a lot of challenges; the main one is of course radio coverage which has, unfortunately, limited range. On some islands it is limited to only certain hours of the day or night.

“I have not listened to the radio for quite a long time now,” explains Tommy, a young man originally from Ureparapara but currently living in Sola on the island of Vanua Lava in Banks group. “The only times for radio to have a good reception is in the afternoon. In the mornings it is impossible to receive radio transmissions.”

“I now go on facebook for information rather than try to listen to the radio, I just have no more time to listen to the radio because there is no access here” expresses another youth from Vanua Lava.

Recent statements from the national broadcasting service explains that soon the whole of Vanuatu will be able to listen to the national radio, this is definitely a great news that will be welcomed by people from all over the country when it happens.

It will be an important development for Vanuatu; likewise it is also important that financial debts be accounted for otherwise we will continue to face an uncertain future.

A team from Transparency International Vanuatu recently visited Big Bay on the island of Santo, the Big Bay area is considered to be among the remotest places in Vanuatu, a return trip from Luganville could cost more than 40,000 vatu. While talking with the people there they expressed their disappointment over the radio’s limited coverage, “we only get connected during certain times, all the other time there is nothing, no coverage,  nothing,” reported a villager from Tsureviu, Big Bay.

bigbay

Similar scenarios can be found in other places around Vanuatu, “we only listen to FM Stations here” was the response the TIV team received while touring the north western part of Malekula early this year.

An American television host once said “if you miss the news for a day, then you miss everything,” if there are people in Vanuatu that are missing out on receiving daily information then we could just imagine the worth of information that has been missed by thousands of people over the years.

With time, and with the right management, we must all look forward to become more engaged and effective in the media industry. Transparency International Vanuatu, as an NGO, has been utilizing the media for years and therefore acknowledges the great work that has been accomplished by our multi-tasked media outlets, but there is still a lot of ground yet to cover and there are still a lot of ears out there that needs accurate information to make the right decisions.

The people’s interest must always come first, political interest must not influence the way we think and act when it comes to important mediums like the radio.

 

 

 

 

 

 

 

 

Fake Flowers Do Not Reflect The Value Of Respect

This article was first published in the Daily Post in early 2014 after TIV witnessed that fake man-made flowers were being adorned on the new Prime Minister at that time.

It is being re-published online surrounding circulating information that fake salusalu”s (flowers) and plastic cups as kava shells will be banned from being used during government functions.

It is part of the Ministry of Agriculture’s 100 Day Plan.


IT IS SAID that dead flowers represent disappointment or unhappy situations while a fresh flowers signify pleasure and happiness.Fresh flowers also represents commitment and satisfaction whereas dead or fake flowers portray laziness and a lack of respect.

Topics relating to flowers have appeared in the media from time to time, with disappointed tourist commenting on the sale of fake lays (salusalu) in the mama’s market, to discussions raised on whether foreign fake products replicating their local true originals should be banned for the good of our nation and our traditions. Realistically, to be greeted locally with a gift that is made from another country literally has little or no meaning and value at all except financial costs.

The election of the new PM (in early 2014) was considered by many as a step back to the beliefs and ideas that prompted us to begin our struggle for independence, whilst others see it as a waste of public funds and time, a process that denies voters their right to a full four year term government. Yet it had happened again, a motion that seemed most likely to fail has succeeded, thus proving that a motion with little fuss around it can become quite effective.

However, this article is not about the fuss nor the reasons behind motions, the point here is the symbol of the flowers that somebody went to a shop, or probably down to the mama’s market to purchase plastic made salusalu’s, foreign made products, at 150VT a piece to present, as a symbol of victory, to the newly elected head of the Government of the Republic of Vanuatu.

The talk on the street says that the high esteem that is inherited by each new legislature is slowly being devalued by the continuous change of governments, the fake salusalu’s on the new Prime Minister already proves that the same story is being told within the government itself.

Transparency International Vanuatu would like to remind everyone that the Prime Minister should never be adorned with fake salusalu’s. The position should be celebrated with fresh sweet scented natural flowers that were prepared by a committed individual, who would be proud to see that their hard work is being worn by an important person. Ideally, that same respect must be shown to Ministers, Senior Government Officials, to friends, families, and most certainly to strangers.

It is important to hold on to the values that our founding fathers held so closely to their hearts and fought so bravely for, a value that motivated them to overcome two colonial powers, the same values that makes our scattered island nation the happiest country in the world – RESPECT.

CLICK HERE to join in the discussions on facebook surrounding this topic.

World Media Press Freedom Day In Photos

THE WORLD PRESS FREEDOM DAY activities in Vanuatu took place on Tuesday the 3rd near the Port Vila Market House.

The activities were spearheaded by the Media Association of Vanuatu (MAV) and included speeches by the Prime Minister, Leaders in the Pacific, the Vanuatu media industry including Government leaders.

There were booths that were set up by different media outlets and organisations to give out information on what they do.

The theme for that day was – Right To Information Saves Lives. The event saw a Media Freedom Parade through town before speeches were given at the Seafront by the Prime Minister, the President of Media Association of Vanuatu including other heads of media companies in Vanuatu.

Enjoy the photos!

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Voters Are Keeping A Watchful Eye On Their Elected Candidates

NOW THAT WE have 52 members of Parliament being elected as per the un-official result, voters are now expecting their candidates or political party to adhere to their campaign messages and promises.

Transparency International Vanuatu (TIV) went around and spoke to several voters about what they expect from their elected candidates. A male youth, aged 23, told TIV that he was happy with his vote in the snap election because he chose a right person. A person who is qualified and believes will voice his concerns in the parliament.

“I voted for a Graon mo Jastis Pati (GJP) candidate who was among the leading candidates in the snap election. I just want to remind my candidate that when you are in the parliament please do not forget the people who voted for you,” the youth said.

The 23 year old also explained that “when you are there in parliament, please do continue to come down to the community sometimes and visit us, see our needs and support us in developing our community.”


 

“I want you to treat us all like we expect you to,” the youth said.


Another female youth of 28 years old, who also voted for a Graon mo Jastis Pati candidate said she is looking up to her candidate in the next four years time.

“Our livelihood this next four years depends on the decisions that you will make,” she said.

WATCHFUL EYE

“I believe people with high qualifications will make a change in the next four years. Therefore I just want to congratulate and encourage that the good works be continued to promote accountability in leadership” she explained.

This female youth continued to say that “since your (GJP) policies are about Lands and Justice we ask you to consider the impacts any land regulations may have on custom land owner lands before passing bills in the parliament. Also justice must always prevail like what we have seen in 2015 where 14 members of parliament were jailed for bribery. People were satisfied to see that justice was served, and that should be maintained.”

TIV also met a 70 year old male from the Island of Ambae who voted proxy in his home Island.He said his candidate contested under the Nagriamel Party.

When TIV asked him if he was satisfied with his proxy vote he responded with a big smile on his face, “Yes I am happy because when the unofficial results were released, my candidate was one of the names who won.”

He continued to say that “it is important for our candidate to think about people at the grassroots level. Pay regular visits to us in the community and help us with our needs to develop our communities in the Island. Also, if you happen to secure a portfolio in the government, always remember the people. Do notbe like the past MPs who never came to our home Island to visit us but would only visit during election campaign periods.”

In addition, a mother of two kids living at Freswota Four area told TIV that MP salaries and employee’s salaries must both be reconsidered.

“Cut down MPs salaries, increase MP allocation, increase minimum wages for employees both private and government and help provide more job opportunities,” she said.

The mother also suggested that all government households should be repaired and rented out to generate more government revenue.

Also, “since my candidate is a lawyer belonging to the Union of Moderate Party (UMP), he should make a law that will require MPs who want to join another party must formally resign. And then they must apply to join another party,” she added.

Moreover, TIV also spoke to two Ifira boatmen aged 34 and 23. They were proud to have casted their votes for a Labor Party candidate who is among the leading candidates in the unofficial results.

“We are very happy with our votes. And now that he will be securing a seat in the parliament we just ask him to work on his policies and that they are fulfilled” they said.“And He must not neglect the grass root level people, this is very important,” one of them pointed out.

Furthermore, a Vanua’Ku Party (VP) voter, who is a 60 years old elderly man, told TIV that he wants his candidate to concentrate on developing communities and not fill up supporter’s pockets.

“The candidate that I voted for in Vila won his seat and he belongs to Vanua’Ku Party. My message to him is clear: do not give or accept any form of bribery; concentrate on developing community services, do not fill supporters’ pockets improve urban health services in Vila so that Vila Central Hospital can concentrate on dealing with referred or serious cases only; and last but not the least VP must have a youth wing so that transitional planning can be encouraged. It will help ease the handover of power from the old politicians to the young leaders,” the 60 year old voter said.

With regards to the role of an MP, the Vanuatu Parliament website explains it clearly. According to the site most MP’s are viewed as “having three roles that of a parliamentarian, constituency representative, and party member.”

If you are interested to know more about the role of Members of Parliament please visit the Transparency International Vanuatu office or call us at 25715. Email: transparency@vanuatu.com.vu

WATCH: Voters share their opinions from the island of Santo.

 

 

 

 

 

 

 

 

52% Of People Think Defendants In Bribery Case Will Be Found Guilty

RUMORS WIRED THROUGH the popular ‘Radio Coconut’ on Vanuatu politics are finally turning into facts. This week the people of Vanuatu have verified more than what they assumed, from chartered flights to suspicious money handlings, the activities from behind the political scenes continue to awe the nation and even more for the crowd that always gather outside the court during the Bribery Case court sessions.

Transparency International Vanuatu (TIV), though not a major media outlet, has taken on the effort to update the public on the outcomes of the court sessions this week through the TIV online news blogsite called tivnews (www.tivnews.wordpress).

What TIV has covered this week has been shared with our readers, and according to our statistics 15% of our readers showed shocked and amazement when made aware of the activities that the concerned politicians were involved in with one reader commenting that it “continues to be interesting by the day”.

People View on Bribery Case Outcome

Furthermore, 28% of our readers were also shocked by this week’s revelations, but they pointed out that they remain neutral judgementally. The lowest scored opinion is at 5%, it represents those that think the defendants will be found not guilty at the end of the court case, while a majority 52% of people felt that the defendants will be found guilty when Judge Sey delivers her verdict at the end of the case.

People listening to the bribery case at the Supreme Court.

People listening to the bribery case at the Supreme Court.

Now that Judge Sey has ruled that there is a case after a ‘no case’ submission by the defence counsels more revelations are expected to unfold over the next court sessions. Of course opinions may change, but currently, according to statistics, it shows that there is already the desire to fight against corruption. And from what we have heard and seen, corruption has become a vibrant prime topic in many conversations this week, and this is expected for the next following weeks and months.

Transparency International Vanuatu put together this graph based on opinions from our readers at www.tivnews.wordress. The opinions do not reflect that of Transparency International Vanuatu as an Organisation, and the opinions certainly have no bearings on the Court processes at stake regarding this matter.