Prime minister Manele says it’s crucial for investment and it grows the economy
BY NED GAGAHE
Prime Minister Jeremiah Manele has strongly defended government’s recent policy decision to grant tax exemptions, saying that it is critical for attracting investment and growing the economy.
During the sine die motion in Parliament yesterday, Prime Minister Manele responded to concerns from critics and the public about the legality and effects of granting tax exemptions to businesses.
Manele commented on revelations from the Opposition that the government had granted $199 million in tax exemptions from January to September 2024.
The issue had sparked widespread debate in the public domain recently.
The Opposition criticized the exemptions, especially given the government’s financial challenges, calling them “outrageous and reckless”.
However, the Prime Minister explained in Parliament yesterday that the country’s taxation regime was specifically designed to include tax exemptions as a fiscal tool for encouraging investment, particularly in sectors vital for long-term economic development.
“Let me therefore first comment on a couple of issues raised by the other side and the public recently, as these are issues that our citizens need to get clarifications on,” Manele said.
The Prime Minister responded directly to claims that tax exemptions are illegal or unlawful, stating that these incentives are lawful and necessary for stimulating business activity.
“Some people are talking as if the granting of tax exemptions is illegal and unlawful. Exemptions are provided to encourage investors, and I see small businesses benefiting greatly from them,” he emphasized.
On tax exemptions, the Prime Minister stated that while they may delay immediate revenue flow, they are essential for attracting capital investment. He argued that this investment would not have been possible without such incentives, which, in many cases, are crucial for getting projects off the ground.
“Granting tax exemptions may delay the early flow of revenue, but it attracts investors who never would have injected capital into our domestic economy in the first place. This capital injection is essential to the economy, and in many instances, fiscal incentives through exemptions play critical roles in attracting investors,” PM Manele said.
The Prime Minister also clarified that the guidelines for granting tax exemptions take into account various factors, including the impact on existing businesses, employment opportunities, and export earnings.
“The guidelines used to qualify applicants for tax exemptions consider all angles relating to their impacts on existing businesses, employment opportunities, and export earnings,” he stated.
He adds that many of the exemptions granted were for essential capital equipment and supplies, critical for both existing and future projects.
These investments, the Prime Minister argued, help build the foundation for long-term growth by creating employment and generating additional taxes down the line.
“Most exemptions that were granted were for capital equipment and other critical supplies to support existing and future projects, which, in essence, is critical as it builds a base from which employment and other taxes can be further generated,” he added.
Opposition Leader Matthew Wale recently demanded clarification on the exemptions, which he said benefited certain foreign companies.
Finance Minister Manasseh Sogavare at that time also defended the exemptions, stating they support critical infrastructure projects, though he did not deny the Opposition’s claims.
Wale condemned the exemptions as unjust, particularly in light of the government’s financial struggles, and called on the Prime Minister to address the issue.
He accused the Prime Minister of being either complicit or too weak to take action, undermining good governance and accountability.
