Whole-House Committee approves tax hike bill with no change

Parliament’s Whole-House Committee, on Monday, has approved the bill submitted by Ihavandhoo MP Mohamed Shifau on behalf of the government designed to increase Goods and Service Tax (GST) and Tourism Goods and Service Tax (TGST).

The bill was approved at a convening of the Committee today, by the votes of 50 parliamentarians from the 70 in attendance. Nineteen parliamentarians voted against the bill, whilst one abstained from voting.

The government is pushing to raise the GST from 6 percent to 8 percent, and the TGST from 12 percent to 16 percent.

Eight amendments were proposed to the bill during Monday’s Committee meeting. Out of the eight amendments – four were submitted by Naifaru MP Ahmed Shiyam, and the other four were submitted by Central Henveiru MP Ali Azim.

The amendments proposed by MP Shiyam were against implementing the tax hike. Meanwhile, MP Azim’s amendments proposed implementing a mid-range hike. All eight amendments were rejected by the majority votes of the parliamentarians in attendance.

Whilst ruling Maldivian Democratic Party (MDP) battles in two factions – one with supporters of President Ibrahim Mohamed Solih and one with supporters of MDP’s leader, Parliament Speaker Mohamed Nasheed – President Solih’s faction voted to pass the bill without any changes. In this regard, MDP’s Parliamentary Group issued a three-line whip on approving the bill.

Finance Minister Ibrahim Ameer, speaking at an earlier parliamentary sitting, said that failure to raise the tax rates will be detrimental, and halt economic growth. He emphasized that Maldives needs to generate more income – adding that the government has always taken the actions deemed necessary for the situation.

Supporters of the government, opposition and the general community have raised concerns over efforts to implement the tax hike. They claim the need to cut down political posts within the government, and reduce pointless expenditures In order to combat the economic crisis.