Ghafoor: Tax hikes used by administrations to steal more

The additional funds raised through tax hikes are used by administrations to run acts of corruption and theft, says Hanimaadhoo MP Abdul Ghafoor Moosa, a politician from the main opposition Maldivian Democratic Party (MDP).

On Sunday, the government submitted legislature to double the green tax and raise TGST and airport departure taxes.

A TGST hike was last implemented by the MDP administration, when it increased the tax from 14 percent to 16 percent last year. The incumbent People’s National Congress (PNC) administration has proposed raising it to 17 percent.

During the parliamentary debate on the new tax hike bill on Tuesday, PNC lawmakers – who hold a supermajority in the Parliament - made serious allegations against the MDP administration.

Baarah MP Ibrahim Shujau, the deputy leader of PNC’s parliamentary group, alleged that the MDP administration had wasted the additional injection of tax money.

He said that the MDP administration had created token jobs at government companies and wasted the aid the country received during the Covid-19 pandemic.

“This is an urgent change that need to be implemented immediately without increasing the burden on people’s pockets,” he said.

Meanwhile, Ghafoor said that the Parliament must consider what a tax hike at such a critical time will do to the Maldivian economy.

He said that Maldives’ revenue is 15 percent higher than before, mainly due to a huge increase in revenue from the tourism sector.

“Honorable Speaker, what’s the use of saying the former administration this or the incumbent administration that? There’s no issue with this country’s economy. There’s no issue with the revenue the state generates. We see a mismatch in the state’s spending,” he said.

Ghafoor said that the administration’s political posts are upwards of 2,000, and the profits of government companies have plummeted by 15 percent.

“He promised the people he will bring an administration that isn’t top-heavy,” said Ghafoor, referring to President Dr. Mohamed Muizzu’s electoral pledge.

Ghafoor said that what’s wrong is wrong, regardless of which administration does it.

He said that the people had high expectations of the incumbent administration, but it has been disappointing the people with its decisions.

“There is widespread corruption and thievery within the administration. They are robbing people in bright daylight. I will not say that things like this did not happen in the MDP administration. It did. But the role of the government is to stop all this,” he said.

“We are seeing administrations change, but corruption rampant within each new administration with spending at an untenable level. It is the people who are suffering.”

Ghafoor said that the quality of life has gone down in the Maldives, and that the decision to introduce new taxes and increase existing tax rates is regrettable.

“There is a certain limit to which we can charge taxes on tourists or anyone else,” he said.

The amendment to the Goods and Services Tax Act will see the TGST raised to 17 percent starting June 1, 2025. Meanwhile, the amendment to the Tourism Act will see Green Tax doubled from USD 3 to USD 6 for guesthouses and from USD 6 to USD 12 for resorts and city hotels.

The government estimates the changes will result in the collection of MVR 963.6 million in these taxes next year.

The third amendment is to the Airport Taxes and Fees Act, which will see the airport departure tax and the airport development fee raised from USD 30 to USD 50 for foreign ‘economy class’ passengers, from USD 90 to USD 120 for both local and foreign ‘business class’ passengers, from USD 90 to USD 240 for ‘first class’ passengers, and from USD 120 to USD 480 for passengers who depart of private jets.