Marshall Islands - Politics, government, and taxation

The Marshall Islands were originally settled by people from neighboring Pacific islands. In the 16th century, Spain claimed the islands, although Germany was allowed trading rights. With decline of Spanish influence, the islands came under the control of Germany, who established a protectorate. At the outbreak of World War I (1914-18), the Japanese took over the islands and administered them under a United Nations (UN) mandate. World War II (1939-45) saw clashes between the United States and the occupying Japanese, with the United States finally establishing control of the islands in 1944. The United States administered the islands as a trustee for the United Nations and used them to begin a series of nuclear tests. The tests subjected the islanders to serious radiation and made Bikini Atoll uninhabitable. This was to have long-term implications for the Marshall Islands, leading to the United States providing considerable financial support while continuing to operate its military bases. In 1965, movements for self-determination of the islands began, culminating in full independence in 1990. The Marshall Islands has a Compact of Free Association with the United States, agreed to in 1986, by which the United States is responsible for defense of the Marshall Islands, rents military bases, and provides financial assistance. The initial agreement was valid for 15 years from 1986 and is being renegotiated.

The 1979 constitution established a parliamentary government, with a president as chief executive and head of state. The parliament is known as the Nitijela. Directly elected for 4-year terms, the parliament has 33 members, known as Senators. The president is elected by the parliament, and the president chooses his cabinet from among the members of parliament. The voting age is 18. Although elections were typically non-partisan on the Marshall Islands, opposition began to emerge in 1991, and subsequent elections have seen incumbents losing their seats. In 2000, the opposition gained 40 percent of the seats in the parliament and established a significant presence. Parliamentary candidates tend to contest elections on the basis of their personalities, rather than their party affiliations, and it is sometimes not clear which party an elected member supports. In 2001, during a no confidence vote (which decides if the ruling government has enough support to survive), 2 ostensible government members voted with the opposition and 1 opposition member voted with the government.

The legal system is based on the former Trust Territory laws, but has been modified by the legislature, municipal

Country Telephones a Telephones, Mobile/Cellular a Radio Stations b Radios a TV Stations a Televisions a Internet Service Providers c Internet Users c
Marshall Islands 3,000 (1996) 365 (1996) AM 3; FM 4; shortwave 0 N/A 3 N/A 1 500
United States 194 M 69.209 M (1998) AM 4,762; FM 5,542; shortwave 18 575 M 1,500 219 M 7,800 148 M
Philippines 1.9 M 1.959 M (1998) AM 366; FM 290; shortwave 3 (1999) 11.5 M 31 3.7 M 33 500,000
Solomon Islands 8,000 658 AM 3; FM 0; shortwave 0 57,000 0 3,000 1 3,000
a Data is for 1997 unless otherwise noted.
b Data is for 1998 unless otherwise noted.
c Data is for 2000 unless otherwise noted.
SOURCE: CIA World Factbook 2001 [Online].

bodies, customary law, and common law. There are 4 levels of judicial courts: the Supreme Court, High Court, district and community courts, and traditional courts. The traditional courts are limited mainly to jurisdiction over traditional titles and land issues.

In the fiscal year 1997-98, the budget anticipated that government revenues would be 25 percent of GDP. Income tax raised 32 percent of government revenue (excluding grants), import duties 28 percent, sales taxes 13 percent, and other income (interest, fees, licenses) 27 percent. There is a continuing program to try to improve tax performance by tightening administration, reducing tax arrears , simplifying import duties to a basic duty of 12 percent (with some exceptions), doubling the fuel tax, reducing tax exemptions, introducing a value-added tax (VAT) and taxes on commercial rentals, and the introduction of user charges.

Total spending in 1997-98 was projected at 53 percent of GDP. On the recurrent expenditure side, general administration takes up 12 percent of total government spending, education 23 percent, health 12 percent, and foreign affairs 10 percent. The gap between revenues and expenditures was more than met by receipts from the United States of 40 percent of GDP, and on this basis, a budgetary surplus of 11 percent of GDP was forecast. Budget surpluses have not always been the norm. Between 1992 and 1995, budget deficits averaged 14 percent of GDP.

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