by Ronald Toito’ona

Solomon Islands former Prime Minister, and current Minister for Finance & Treasury (MoFT), Manasseh Sogavare has strongly defended his government’s administration of the tax and duty exemption regime amidst ongoing public and political scrutiny.

Sogavare delivered a comprehensive statement addressing the management of tax and duty exemptions in parliament this week.

This topic has garnered significant public discussion and debate, particularly on the government’s transparency and accountability in managing exemption regimes, in light of a question posed by the Opposition Leader, Matthew Wale. 

Wale had sought clarity on exemptions granted in 2024, their beneficiaries, and related figures. 

This article unpacks the key points Sogavare presented, the context of tax exemptions, and the subsequent discussions involving the opposition leader, and parliamentary procedures.

Ministerial Statement on Tax and Duty Exemptions

Sogavare began by asserting that tax exemptions are a critical macroeconomic policy tool that incentivizes investment and supports national development objectives. 

“Tax and duty exemptions are powerful strategies for driving economic growth,” Sogavare stated, emphasizing their importance for the private sector’s participation in infrastructure, manufacturing, and rural development.

The minister outlined two categories of exemptions: statutory exemptions, mandated by law and international agreements, and non-statutory exemptions, granted based on recommendations by the Exemption Committee. 

For statutory exemptions alone, the total value granted from January to October 2024 amounted to SBD$271,619,028.03. 

Non-statutory exemptions during the same period totaled SBD$122,831,609, bringing the combined total to SBD$394,450,637.31.

Breakdown of Exemptions by Sector

To provide transparency, Sogavare revealed the allocation of exemptions across various sectors:

• Construction and Infrastructure Development: SBD$32,197,913
• Manufacturing: SBD$32,475,240
• Tourism: SBD$26,849,193
• Telecommunications: SBD$4,385,798
• Agriculture: SBD$4,861,969
• Riot-related damages and others: SBD$15,600,559 and SBD$8,460,637, respectively.

Despite these figures, Sogavare clarified that the actual utilization of these exemptions remains significantly lower, with only 11 of 60 exemptions fully utilized by the expiry date, accounting for a cost of just SBD$50 million.

Criticism from the Opposition

Speaker Patterson Oti reminded the House of Standing Orders, noting that debates on ministerial statements are restricted. 

However, he allowed short questions, which led to further elaborations from the Opposition Leader.

Wale challenged the government’s handling of exemptions, citing contradictions between Sogavare’s June statement to halt discretionary exemptions and the continued approval of exemptions thereafter. 

Wale raised concerns over fiscal responsibility, stating:

 “The Minister had reserved SBD$250 million for exemptions but granted approximately SBD$200 million, raising doubts about financial prudence.”

He further questioned whether the Exemption Committee had received clear directives following the Minister’s statement, noting inconsistencies in the committee’s operations.

 Wale asserted that the lack of coordination undermines the credibility of government processes.”

Minister’s Rebuttal and Commitments

In response, Sogavare emphasized that exemptions are granted based on stringent criteria, including their potential to create jobs and generate long-term tax revenues. 

He dismissed allegations of irresponsible governance as “totally misplaced and uninformed,” reaffirming his commitment to improving exemption policies through ongoing reforms.

Sogavare highlighted the government’s broader tax reform agenda, including plans to introduce a Value-Added Tax (VAT) system to replace inefficient taxes like PAYE and stamp duties. 

“The aim is to create a fair, adequate, and transparent tax system that supports growth and reduces the reliance on exemptions,” he explained.

Wale to seek further Legal advice

Wale acknowledged the proprietary nature of tax information but urged clarity on the government’s June statement. 

“The public deserves transparency on such matters to ensure accountability,” Wale argued, signaling his intent to seek further legal advice on the issue.

Meanwhile, the Finance Minister assured Parliament of improved administration and oversight of exemptions, with directives issued to the Exemption Committee to provide detailed recommendations for every request. 

He reiterated that the government remains committed to supporting both foreign and local investors in alignment with national development goals.

“This administration will not be sidetracked by political agendas or baseless allegations,” Sogavare declared, ending his statement with a call for constructive dialogue.

ENDS//