26 June 2012
The fallout from the global economic crisis has reached the distant shores of the Marshall Islands, a group of 29 atolls and five islands scattered over 750,000 square miles of the Western Pacific.
The United States aid program - which contributes more than 60 per cent of the Marshall Islands' annual budget - comes to an end in 2023 and the islanders are preparing for tougher times ahead.
An overhaul of the islands' creaking tax system is seen as a priority, and four officials from the Division of Revenue and Taxation have spent a month at the University of Sydney with taxation law expert Professor Lee Burns. The program was subsidised by AusAID's Australian Leadership Awards fellowship scheme, which aims to develop leadership and build partnerships with developing countries.
Professor Burns, who has worked with the IMF for 20 years, helping with tax reform programs in Tonga, Vanuatu and Samoa, said: "The proposal is not about increasing revenues, it's about diversifying revenue sources and replacing lost revenue."
The urgency behind the tax reform proposals was set out in a 2010 report to Marshall Islands Finance Minister Jack Ading, which described the existing tax system as archaic, inefficient and inequitable. It added: "Tax collections are far below the levels that would result from universal and honest compliance practices."
Contact: Richard North
Phone: 02 9351 3191