Deputy Commissioner General of Taxation Asma Shafeeu told the Parliament’s Economic Committee on Monday that reducing the land rent on islands leased for tourism will result in an MVR 590 million loss in projected state revenue.
The committee summoned senior officials from Maldives Inland Revenue Authority (MIRA), Maldives Monetary Authority (MMA), Capital Market Development Authority (CMDA), and Maldives Association of Tourism Industry (MATI) for the meeting on Monday afternoon.
Speaking at the meeting, Asma told the committee that making the reduction will result in a 36.8 percent drop in revenue from tourism land rent.
“We usually get MVR 1.6 billion as collections from tourism land rent,” she said.
Asma said that the state could however, find additional sources of revenue if the government brings in additional investments in the tourism sector.
Meanwhile, MMA Governor Ali Hashim also said that reducing tourism land rent would reduce state revenue, and advised against making such a decision at this time.
“It is not advisable to do something that would reduce our revenue, at a time when we are experiencing the Ukraine conflict and other such supply shocks. The country [Sri Lanka] has gone to IMF over such an issue,” he said.
He also advised an assessment of the potential impact the decision would have on state revenue.
Tourism Minister Dr. Abdulla Mausoom insisted at the Parliament last week though reducing the tourism land rent would have a slight impact on state revenue, tax revenue would increase.
He said the benefit of having more resorts would outweigh the benefit of keeping the tourism land rent high.
“What’s of most benefit to the state in the long term is to revive business and increase tax revenue,” he said.
Government submitted the bill to reduce tourism land rent, stating it would mitigate the loss to resorts from implementation of minimum wage.