The move to raise the tax rates without any visible effort to recover billions owed to the state is concerning, states North Maafannu MP Imthiyaz Fahmy (Inthi), prominent parliamentarian from Maldivian Democratic Party (MDP).
The government is pushing to raise the GST from 6 percent to 8 percent, and the TGST from 12 percent to 16 percent.
The bill, sponsored by Ihavandhoo MP Mohamed Shifau, is currently being reviewed by the Whole-House Committee.
At the committee meeting Tuesday, Inthi said the decision to raise tax rates was made without sufficient discussion.
Inthi said that given the Finance Minister Ibrahim Ameer himself has repeatedly stated that the Maldivian economy is doing well, he sees no reason for a tax hike if the economy is doing well.
“The minister always says the Maldivian economy is doing well. Even as he says that, there is a culture in practice even to manage recurrent expenditure – taking loans. This culture continues,” he said.
Inthi said he hasn’t seen the government manage to recover even a single cent of the billions owed to the state.
The accumulated fines owed to the state alone amount to billions of MVR, he said.
“It is greatly concerning that without recovering any of that, there is this new submission to raise the tax on the people,” he said.
MDP’s parliamentary group passed a three-line whip last week to pass the bill without revision. However, some MDP parliamentarians, including Inthi, have expressed concern over ‘rubber stamping’ the bill, stressing the need to discuss the bill with stakeholders.
Chairing Tuesday's committee meeting, Nasheed said a decision regarding the bill will be made after summoning relevant experts to the committee.
Nasheed’s decision was welcomed by his supporters within the deeply divided MDP, while MPs aligned with President Ibrahim Mohamed Solih argued the bill must be passed intact.
Finance Minister Ibrahim Ameer, who attended the Parliament to answer questions Monday, told MPs that failure to raise the tax rates will stop economic growth.
Ameer said that while Maldives has managed to rebound from the COVID-19 pandemic, expenditures continue to mount and the country faces more threats – such as the Russia-Ukraine war.
He said the failure to increase income will halt multiple projects.
“What happens then is the economic growth rate drops further. It is my sincere appeal to pass the bill on GST and TGST as it is,” he said.
Those opposed to a tax hike argue the government should instead cut unnecessary expenditure, such as the appointment of people to political posts.