22 Jul 2011

Sunset clause on Cooks' witholding tax no sweetener: finance minister

2:14 pm on 22 July 2011

The Cook Islands finance minister says a sunset clause on a withholding tax the government ditched 10 years ago but is reintroducing in September is no sweetener.

The 15 percent tax on interest accrued in bank accounts will cover a budget shortfall of about 1.6 million US dollars.

It's expected to generate about 800 thousand US dollars in 12 months, a figure that's doubted by the Bankers' Association and the opposition, who maintain it will discourage people from saving.

But Mark Brown says it's not a long term solution to the country's economic difficulties.

"This is not part of our long term plan as to how we're going to increase the wealth of the country. We're not increasing government revenues through increasing taxes, we are increasing government revenues through increased economic activity. So as it's not part of our long term plan I definitely will be looking at it in two years' time with a view to removing it."

The Cook Islands finance minister, Mark Brown.