Shifting tax from rice to alchohol, cigarettes

Under the new budget taxes on beer and cigarettes will be raised by 20%, while taxes on rice imports will be slashed to nil.

The negative social externalities associated with beer and cigarettes have been cited for this change, but with soaring world food prices, it is not clear if the tax cut will fully counter record rice prices.

With rice already costing US$1 per kilo in Honiara and higher elsewhere, one NGO has already called for a return to traditional foodcrops as a means to combat this rise.

Whether locally grown or imported, the big question is: how can SI feed itself?

US$200mil budget tabled...both growth and challenges ahead

Parliament is now debating the US$200 million budget. According to SIBC, recurrent spending is about $145million, while the development component is $55million.

According to Solomon Star, Finance Minister Rini's speech emphasised that rising oil prices, recovery from the conflict years and the end of logging will be the big challenges ahead.

The last two issues have already been highlighted by the Central Bank governor Rick Hou as key in the coming years:

“Economic growth in 2008 is foretasted to be substantially lower than in 2007. In fact International Monetary Fund has put a forecast of 1.5 percent growth by 2010.

“So you go from our growth of 10 percent now to 1.5 percent in less than five years. We are actually going backwards,”