The Coalition Government has given assurances that they will not alter tax rates “in the near to medium term” to generate more revenue. Instead, the focus will be on strengthening their tax collection mechanisms, a strategy outlined in their 2024-2025 National Budget, presented by Deputy Prime Minister and Finance Minister, Prof Biman Prasad.
According to its Medium Term Fiscal Framework spanning from 2024 to 2027, the Government anticipates revenue will elevate to “around 27per cent of Gross Domestic Product in the medium term”, a level comparable to that before the COVID-19 pandemic.
The government stated, since significant changes to tax have already occurred, there is limited scope for subsequent modifications in tax rates in the near to medium term. Hence the emphasis would be on boosting compliance via education and self-regulation, refining some of the tax exemptions and incentives, and employing strategies against deliberate tax evasion and avoidance.
Guidelines for the medium term include gradually expanding the tax base by removing exemptions and collecting revenues from e-commerce transactions. There will be attempts to improve tax compliance and gathering of tax arrears. Additionally, efforts will be made to simplify the tax regime and administration to promote tax compliance. The VAT regime will be reviewed to transition to a single rate when appropriate, incorporating expenditure strategies to support vulnerable groups. Furthermore, non-tax revenues will also be reviewed on a cost-recovery basis while safeguarding the vulnerable and disadvantaged.