Tonga exchange levy delayed yet again

Transcript

A controversial levy in Tonga has been deferred for a third time so it can be amended to include more money exchange operators.

The one seniti levy on foreign exchange transactions, was due to come into effect on Friday but has been put off again until next year.

The levy will help pay for the 2019 Pacific Games which Tonga will host.

Tevita Lavema'au [Te-vee-tah Lah-veh-mah-ow] spoke to Indira Moala.

TEVITA LAVEMA'AU: The first issue is that the Tongan version of the Act is inconsistent with the English version. This is regarding how to impose the levy. So in that regard, the Tongan version should be taken as the right one, but that was not the intention of the (translated) Act. And the second issue is that the Act does not include those who are actually involved in foreign exchange dealings. It only covered the banks. So it is not fair to impose the levy only on the financial institutions. So we need more time to regularise it and the House will be opening on the 26th of February next year. So we are hoping to put everything there and then we will start rolling over the Levy, probably on the first week of March.

INDIRA MOALA: Seeing as there is a delay, will there be a chance perhaps now for more public consultation before its implementation next year?

TL: Of course, of course. The consultation is ongoing.

INDIRA MOALA: What have people said so far in terms of deferring the levy and the reasons behind it?

TL: Actually the people at large - we don't have much resentment from them. It's only the financial institutions. Because we made it clear that the imposition of the Levy is on the spread of the banks. They're not going to pass it on to the consumers. It's just on the margin that the bank makes and that Levy is imposed on that.

IM: So the charge won't be passed on to the consumers? It will be taken on by the banks?

TL: No, no. That was not the intention of the Levy. The Levy is only to take out one seniti for every dollar made by the bank on the dealing of foreign exchange.

IM: So this won't affect the public or those that are using those services for foreign exchange?

TL: Definitely, definitely.

IM: Aisake Eke (Minister of Finance) had told us that it's up to the bank whether or not they impose the charges on the consumer.

TL: No, no. The intention of the Act is just to take it out from the spread that is made by the bank. And if the bank won't make any profit on that, then we wont charge any levy on foreign exchange.

IM: And so that same rule applied to the banks will now be applied to all the other foreign exchange services as well?

TL: Exactly, exactly. See the main intention of this Levy is to raise funds for the Sport Games in 2019, and we're still in the process of thinking. Maybe we can, after one year of putting this levy in place, then we can reassess whether one cent is efficient or can we reduce it to half a cent.