Many of us can remember the difficult times during the tensions when the Government did not have enough funds for even the basics such as roads, schools and hospitals. Tom Perry meets two people focused on making sure this never happens again.

They are the basics of our everyday lives; the core necessities of a country: roads, schools, hospitals and police.  These are the essential services that we rely on to help us get through our day. Yet seven years ago, with virtually no revenue coming into the country and no taxes being collected, the Solomon Islands Government did not have the funds to sustain any of these basic necessities.

With the arrival of RAMSI in 2003 and the end of the tensions these core services have been restored. But still not many of us actually stop to think about where the money to pay for these services comes from?
And while funds earned from trade contribute to Solomon Islands economy and Government revenue, the key source of funds for running the Government and indeed the nation, remains closest to home; the people and businesses of Solomon Islands.

This happens through one very important process: taxation.

“A tax is essentially a person or a business’ financial contribution to their country to pay for the essential Government-provided services that they use on a daily basis,” explains George Tapo, Solomon Islands Deputy Commissioner of Inland Revenue. “A tax is usually a portion or percentage of a person or business’ income, or it can be a certain amount taken by the country from the sale of most items that you can buy from a shop.”

It is from these various taxes that Solomon Islands basic services such as health clinics, roads and schools – the projects that ensure any country can grow – are funded.

The Inland Revenue Division of the Ministry of Finance and Treasury collects approximately 60% of the Solomon Islands Government’s revenue.  With 97 staff, backed up by a team of four advisers from RAMSI, Solomon Islands Inland Revenue Division is led by Andrew Minto, a New Zealander currently acting as Commissioner and George Tapo, his counterpart and acting Deputy Commissioner.

Both Minto and Tapo aim to make sure taxes are collected so that Government has the money to run the country effectively.

“Without people contributing to the country by way of taxation, the basics of our everyday lives may not be able to be provided or work properly,” explained Mr Minto, who before arriving in Solomon Islands in early 2008, served with New Zealand’s Inland Revenue division for more than 30 years. “A tax system is a country’s core way of ensuring it has the money it needs to provide for its citizens.”

Following the arrival of RAMSI in 2003, the economy of Solomon Islands has seen a startling resurgence. This year the Government expects to collect more than $1420 million – a stark contrast to the $379 million the country collected in 2003. This additional revenue to the country is set to go towards core services, such as education, health, security etc. As Mr Minto explained, this money is vital to supporting the continual growth of Solomon Islands.

“As the country’s revenue increases, so will the positive changes Solomon Islanders see in their daily lives,” he said.

Internally too, the Inland Revenue Division has undergone significant change in just six short years. A strong focus on training and skill development is now in place with 30 per cent of the Inland Revenue Division staff now undertaking formal part-time study in conjunction with their work, including studying for diplomas and degrees in areas such as business, commerce and management. Internal training programs include skill development in areas such as leadership and management alongside taxation skills. 

This focus will help to ensure the long-term strength and health of the organisation.

The role of bringing back the revenue Solomon Islands needs – and doing it fairly – is, however, not without its challenges. When around 80 per cent of the country live in rural areas and do not have a regular income, people may question how contributions are shared throughout the country.

“Everybody contributes in some way,” says Mr Tapo, who has served with the Inland Revenue Division for 20 years, including during the tensions, which brought enormous personal challenges to him and his staff.
“Those who do not hold a job where they earn a regular salary still contribute taxes when they pay for items such as telephone calls and petrol – through Sales Tax, and household items such as rice, canned tuna, furniture and radios through Goods Tax.”

One of the biggest challenges Solomon Islands has faced financially is that many businesses have not been contributing back to Solomon Islands, despite running strong, financially-successful businesses here. According to Mr Tapo, this is now changing.

“We’ve got three approaches,” said Mr Tapo. “They are to identify businesses that are outside the tax system, help educate business operators so that they’re aware of their obligations, and take action against businesses that deliberately try to avoid tax.”

The tough new approach is clearly working, with revenue increasing considerably since 2003. This money is flowing directly to the roads, schools and health services that Solomon Islanders use every day. However according to Mr Tapo, business owners are also seeing significant benefits to their businesses through the improved tax system.

 “By getting involved and understanding how the Solomon Islands tax system works, many businesses are actually also improving the way they run their finances,” said Mr Tapo. “There is an immediate benefit to both their country and their own business.”

Mr Tapo added that as the country’s revenue increases and the country’s financial situation improves, Solomon Islanders will feel a strong sense of pride in their country’s core services.

“Whether driving along Honiara’s roads, standing alongside police, or taking their children to school, Solomon Islanders can now have greater confidence in the knowledge that they have played their part in building some of the core elements of their nation.”