Financial Secretary Office News

Financial Secretary Office News

Cook Islands Economic Development Strategy – July 2019

The Ministry of Finance and Economic Management (MFEM) will undertake an Economic Development Strategy (EDS) during 2019/20. The strategy is designed to address cross-cutting economic issues, with the aim of creating an economic environment that supports sustainable economic development over the next 10 years. The strategy is intended to be informative, involving a comprehensive and realistic assessment of the current challenges and opportunities facing the economy. The EDS will provide guidance for government decision-making over the medium and long-term.

The Economic Planning Division of MFEM are currently in the process of drafting information papers to inform public consultations. Please note that business owners may receive a survey in the coming weeks to help inform these papers. Responses will be treated confidentially.

Following the drafting of information papers, public consultations will be undertaken, both in Rarotonga and the Pa Enua, culminating in an Economic Conference. The aim of these consultations will be to initiate discussions on the Economic Development Strategy and to gather further information on the challenges facing the economy. This will be followed by drafting of the Strategy and further public consultations prior to the official release which is anticipated in early 2020.

Financial Secretary Garth Henderson stated that ‘the Government is looking forward to working with businesses and the community in developing the EDS. This is an opportunity to share some of our research and data in a meaningful way, examine lessons learnt from our past, consider how our communities view our most serious development challenges, work together and come up with a focused and outward looking plan that will direct our development aspirations over next 10 years.’

29 July 2019

ENDS


$19.4M Recovered From Tax Amnesty

In December 2016, the Prime Minister, Hon. Henry Puna, announced a tax relief package to the community in the form of a Tax Amnesty. In response to this announcement a press conference was held in January 2017, where the Minister of Finance, Hon. Mark Brown provided the details of the Tax Amnesty. 

The policy reasons for the Tax Amnesty stemmed from the identification of the overall tax debt owed to Government at the time being close to $36 million, of which, it was believed that approximately $25 million was collectible and the balance of $11 million was classified as being irrecoverable.

The main purpose of the Tax Amnesty was to put a large number of taxpayers in an improved financial position, through the remission of additional taxes (and other taxes where appropriate), so these taxpayers could better contribute to the future economic growth of the Cook Islands. The Financial Secretary, Mr Garth Henderson was pleased that the Tax Amnesty allowed taxpayers who had unpaid tax and outstanding tax returns to come forward, and be compliant with their tax obligations into the future.

The Income Tax Amendment Act 2017 gave legal effect to the Tax Amnesty in June 2017. The Tax Amnesty came into effect on 1 August 2017 and allowed taxpayers to make applications for relief up until 31 March 2018. The Tax Amnesty initially provided taxpayers relief from paying additional taxes if the outstanding core tax was paid or placed under payment arrangement.

In January 2018, the Tax Amnesty was extended with the passing of the Income Tax.

Amendment Act 2018, which provided the remission of all tax liabilities for tax periods before 1 January 2010. This meant that taxpayers were not required to file outstanding tax returns or pay outstanding tax liabilities for tax periods before 1 January 2010. A total of $10.4 million (tax and additional tax) was remitted for tax periods prior to 1 January 2010.

During the course of the Tax Amnesty period, Revenue Management Division received 1,182 Tax Amnesty applications and $21.8 million in core tax was assessed from tax returns filed under the Tax Amnesty. Payments totaling $19.4 million for core tax were paid with another $2.4 million in tax currently under payment arrangements. A total of $12.4 million of additional tax was remitted as a result of the Tax Amnesty applications.

Tax Amnesty Original Team cropped

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19 June 2019

Shipping Subsidy 2019

Two subsidised voyages to the Northern Group to support the Palmerston House opening

The Ministry of Finance and Economic Management (MFEM) today announced that the Cook Islands Government has agreed to provide Taio Shipping with a subsidy for two voyages from Rarotonga to the Northern Group to coincide with the opening of the Palmerston House in Rarotonga in early July 2019. This subsidy follows in the footsteps of the Northern Group pilot shipping subsidy project implemented by MFEM in 2018 with vessels operated by Cook Islands Towage and Taio Shipping. 

Palmerston House is owned and operated by the Palmerston Charitable Trust and has been built with funds mobilised by Palmerston families on Rarotonga and in New Zealand and Australia. The House will provide a central base and much needed accommodation for Palmerston families when visiting Rarotonga. Palmerston House is scheduled to be officially opened on 8 July 2019.

“To help celebrate this important event, the Government is delighted to be able to assist the Northern Group communities to transport their contributions such as fish, uto and pare rito”, Financial Secretary Garth Henderson, said.
The first voyage, on the MV Lady Moana, to Penhryn, Rakahanga and Manihiki is expected to leave Avatiu Harbour on Friday 21 June 2019. The second, on the MV Grinna, to Palmerston, Nassau and Pukapuka is expected to depart on Saturday, 22 June 2019. Both vessels are expected to be back in Rarotonga in time for the opening ceremony.

The subsidy funding, equivalent to 60 percent of expected operating expenditure for each voyage, has been made available from the 2018/19 Budget Inter-island Shipping Subsidy appropriation administered by MFEM. The overall objective of the subsidy program is to improve the regularity, reliability and affordability of shipping services to the Northern Pa Enua. 

The Government intends to extend the shipping subsidy in the 2019/20 financial year, and has appropriated $500,000 in the 2019/20 Budget for this purpose.

Future inter-island shipping plans

The Government’s longer-term goal is to provide a regular, reliable, modern, efficient and safe interisland shipping service. Recognising that a shipping subsidy is only suitable as a temporary measure that will not in itself achieve this goal, the Government flagged two additional measures in the 2019/20 Budget. 

Landing craft cargo vessel 
The first is $2.5 million of Cook Islands Government funding for the procurement of a medium-sized landing craft vessel, with crane facilities, designed to transport heavy equipment and construction materials. The landing craft will support the implementation of the Government’s planned Pa Enua infrastructure projects over the 2019/20 estimates and forward budget period. 
The procurement of the landing craft vessel, and arrangements for its operation, will be subject to the standard Government Procurement Policy. This sets out a fair, transparent playing field for public procurement where everyone has a fair chance of bidding for public goods and services and provides competitive pricing to ensure value for money for the tax payer dollar. 

Purpose-built passenger/ general cargo vessel
The Government has requested support from the Government of Japan in developing a project to deliver a purpose-built shipping vessel that will provide passenger and general cargo inter-island services.
The Government anticipates that this will be a two-stage project. Stage 1 will deliver a comprehensive business case to inform a Government decision on proceeding to Stage 2. The second stage would involve funding arrangements, detailed design, construction and operation of the vessel. While discussions are at an early point, $250,000 of ODA funding has been allocated for 2019/20 in anticipation of Stage 1 technical assistance from the Government of Japan.

19 June 2019
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