19 October 2017

New Taxes in East Timor as Government announces VAT and Hikes in Tobacco and Alcohol Prices

ETLJB Macau Hub reported on 18 October 2017 that the Timor-Leste Government wants to double non-oil tax revenue to US$400 million per annum with the introduction of value added tax by 2020.  In addition, it plans to increase taxes on tobacco and alcohol. The plans were announced by the East Timor Minister of Planning and Finance Rui Gomez during the second day of the Parliamentary Plenary proceedings on considerations of the new minority government's program for the pending legislative period.

The Government is headed Mr. Mari Alkatiri from the Revolutionary Front for an Independent East Timor (FRETILIN) which is facing a hostile opposition in the new Parliament following elections a few months ago.

According to the MacauHub report, Minister Gomez stated during the debate that "securing more domestic tax revenue is a critical issue for the future of Timor-Leste, and is a priority of the government.”

The Minister added that the VAT will contribute about 5.0% of GDP. Progressive rates in ares of the economy that harm public health such as the consumption of tobacco and alcohol will accompany the VAT laws. East Timor has a worrying level of tobacco consumption and the government has recently implemented a public health policy and anti-smoking laws to try to combat this social problem.

East Timor has been under pressure from the IMF of late in relation to revenues. According to a report in LUSA, the Minister was quoted as saying that the new taxation measures were "necessary to combat the informal economy, which accounts for 60 to 70% of household income, but does not contribute to state revenues."

This is an economic attack on the poor. It might make sense to irrational economists to tax everything that moves but from a social and political perspective, it does not make any sense at all. On the contrary, it is incomprehensible why the State would impose additional taxes (other than the alcohol and tobacco taxes that will contribute to public health in East Timor) on poor families, most of whom are struggling and in many cases failing to have the capacity to pay for housing, food and water, education, health and other basic necessities such as pre-natal care, elder care and other individual and family needs.

If the East Timorese informal economy is the problem, then it should be the subject of specific policies and laws not by a blanket VAT tax  on the whole community particularly if food and the other usual exemptions are not spelled out.

Oil companies talk Greater Sunrise options

Extract: The settlement of East Timor and Australia's border dispute means the parties can move on to discuss development options for Greater Sunrise, but hurdles remain

Full story: http://interfaxenergy.com/gasdaily/article/27998/oil-companies-talk-greater-sunrise-options

Indonesia massacres: Declassified US files shed new light

Extract: Brad Simpson, founder and director of the Indonesia and East Timor documentation project, pushed for the files' release

"These documents show in great detail just how aware US officials were of how many people were being killed," said Mr Simpson, noting "the US stance at the time was silence".

Human Rights Watch researcher Andreas Harsono also says his extensive research has found no public comments from the US government at the time about the killings.

Full story http://www.bbc.com/news/world-asia-41651047

Image added by ETLJB

Political turbulence in East Timor could delay Greater Sunrise oil and gas treaty

Will the Alkatiri minority government survive?
Sydney Morning Herald A landmark agreement to develop billions of dollars' worth of oil and gas reserves in the Timor Sea has been referred to East Timor, where the future of country's new minority government is in doubt.

Opposition parties, which together hold a majority of parliamentary seats, are threatening to vote down as early as Monday the government's program, the first trigger that could lead to the government's fall. 

Full story: http://www.smh.com.au/world/greater-sunrise-oil-and-gas-project-hinges-on-minority-east-timorese-government-20171015-gz1g6v.html

See also on ETLJB 

TIMFO: Agreement on Draft Treaty between East Timor and Australia on Delimitation of the Maritime Boundary

New dawn on Greater Sunrise energy dispute
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