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Radical tax reform proposals will go before the Council of
Ministers, says PM, 20 November 2006
A proposal to heavily reduce or eliminate many taxes would be
put before the Council of Ministers as soon as possible, the Prime
Minister Dr José Ramos-Horta said today.
"I have asked several agencies, including the World Bank,
the International Monetary Fund, the United Nations Development
Project and our own Government tax advisors to prepare comparative
studies for sweeping taxation reforms in Timor-Leste," Dr
Ramos-Horta said today. "As soon as I receive these proposals
I will study them and prepare a submission for the Council of
Ministers for further discussion and consultation."
The Prime Minister said he favored eliminating taxes, particularly
on basic consumer items.
"I favor eliminating or reducing taxes altogether on equipment
that is necessary for educational purposes - such as computers.
And we should eliminate or reduce taxes on equipment that is necessary
for industry production, or agriculture or public transport.
"I believe that such reforms will spur economic activity
and create jobs."
Dr Ramos-Horta said that as soon as he took office he began reviewing
the country's taxation system.
"I spent hours going through our taxes, item by item,"
he said. "I acknowledge that I am not an economist , least
of all a tax expert. But one only needs to have some common sense
and average intelligence to figure out the current system is cumbersome,
and discouraging to both national and international investors.
"We are a developing country with a dedicated but inexperienced
public administration so it seems obvious to me that one way to
discourage economic activity is to have a complex and onerous
taxation system."
Dr Ramos-Horta said he thought some taxes should simply be eliminated.
"This is a very important initiative and it will have to
be taken to the Council of Ministers for discussion and consultation,"
he said.
"I am confident that the Council of Ministers will support
the simplification of the tax system so that we can go ahead and
enact the reforms. I am very confident that such a move would
spur economic activity and create many jobs. Timor-Leste would
in time become a net exporting country rather than an importing
one.
"We have enough revenues from oil and gas, the result of
a high oil price but that high oil price affects all of our economy.
It affects transportation of all goods and power generation -
it affects the pockets of Timorese - particularly the poor.
"Therefore we have to find creative ways to put money back
into the economy."
Dr Ramos-Horta summed up proposals to reform the tax code as:
" Simplification of the tax system.
" Abolition of or drastically reducing income tax rates.
" Reduction of import duties and strengthening customs administration.
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