Athif Shukoor: Better to raise taxes such as GST as a last resort

Ibrahim Athif Shakoor, a researcher of the Maldivian economy, has stated that a measure to ensure government’s finances meet ends such as raising taxes like the Goods and Services Tax (GST) that weigh heavy on the public should be considered as a last resort.

The government has initiated discussions with stakeholders on increasing GST and and Tourism Goods and Service Tax (TGST) – proposing to raise the GST from 6 percent to 8 percent, and raise the TGST from 12 percent to 16 percent.

It was discussed to implement the change within the next six months.

Athif, who also served as the head of Maldives Monetary Authority’s (MMA) Finance Intelligence Unit, told today that the first measure to opt for if there are discrepancies within government’s finances is to reduce operational costs.

After this, he said the expenditure that does not contribute to GDP can be slowed down.

“For an example, the establishment of an ice plant increases the number of days fish can be stored. As a result, GDP increases,” he explained.

Athif said that such projects increase GDP and jobs which paves way for improvement of the economy. He stressed that cutting down expenses that does not contributed to GDP was an important step towards making ends meet.

The other measure which can opted as per Athif is to identify and separate affluent persons benefitting from subsidies. He said that subsidies such as ones pertaining to staple foods benefit people that are not entitled for it.

Athif went on to state if taxes need to be raised – first a progressive tax needs to be introduced, to be charged from the wealthy’s income.

“Taxes like GST applies to everyone equally. Therewith, if this tax is increase, the struggle of the poor will accumulate,” he had said.

He stressed that these were the reasons he believed raising taxes such as GST and TGST should be considered as a last resort.