There is no point in increasing revenue by raising taxes while the government's running costs, especially on political employees, remain unchanged, former Finance Minister Ibrahim Ameer said today.
Speaking to Adhadhu on the government's decision to increase tourism taxes to increase state revenue, Ameer said the tax hike should be done after taking necessary measures to reduce expenditure. But to date, much of the cost-cutting policy has been on paper, he said.
"The government should reduce the number of political employees. And tax spending should be transparent. Government companies should increase efficiency. Travel for political purposes should be reduced. Useless vanity projects should be stopped," Ameer said.
He also expressed concern as proposals have been made to implement things that are not in the Medium-Term Revenue Strategy. While this is a document with legal authority under a law, Ameer said the government cannot act against it.
Ameer noted that it was not good to increase taxes again in a way that would affect the tourism industry. Taxes were earlier increased with government spending cuts and numbers to cover recurrent expenditures, he said.
These changes are not in line with the current situation in the tourism industry, he said. Even when taxes were raised in the previous government when he was finance minister, the main concern of the tourism industry was the impact on revenue, Ameer said.
According to some recent figures shared by the Maldives Association for Tourism Industry (MATI), the average daily rate of tourists staying in Maldives is declining. The number of tourists visiting resorts is decreasing and the number of tourists visiting guesthouses is increasing.
Amir said that tax increases could likely reduce tax revenue instead of increasing it because of the decline in tourist arrivals to the resorts, which will have a negative impact on their income. He warned that as the resorts become more expensive, the number of tourists coming to the cheaper guesthouses will increase, but the revenue will not go up.
The government has proposed amendments to the TGST and GST Bill, Airport Passenger Taxes and Fees and the Tourism Act to increase the green tax.
