Prime Minister Hu’akavameiliku announced today that re-applying consumption tax (CT) on agricultural imports that was set to kick into effect this year has been postponed pending more consultation with local farmers and businesses.
Speaking at a press conference today, the PM said that consultation took place but perhaps it was not “enough” to convince farmers, but he did not provide details on the outcomes of those discussions with farmers or how those outcomes led to the Cabinet’s recent decision to reconsider reintroducing the CT policy on farming goods.
This announcement comes after the issue was raised in parliament during this week by People’s representative Piveni Piukala saying that agricultural produce will cost more for consumers as a result of this re-introduction of the CT policy. The Growers Federation of Tonga also showed concern on the same matter.
Currently, importers of agricultural goods benefit from a CT zero rate policy, while those buying farming supplies locally pay CT included in the goods’ prices. The PM did not say how much government revenue will be collected if CT is re-enforced.
The Prime Minister said that the government will likely review its decision next year after holding further discussions with both farmers and agricultural businesses.