Mahendra Chaudhry, the leader of the Fiji Labour Party, has criticized the current value-added tax (VAT) rate of 15 percent, calling it excessively high. During the FLP Annual Delegate Conference held in Nadi, he advocated for a reduction of the VAT to at least 9 percent, arguing that the current rate is unsustainable and detrimental to the economic well-being of citizens.
Chaudhry pointed out that even Prime Minister Sitiveni Rabuka had previously acknowledged that the 15 percent VAT was too steep. He expressed disappointment that the Prime Minister seems to have shifted his stance due to pressure from his Finance Minister, Biman Prasad, and Richard Naidu, chair of the Fiscal Review Committee. Chaudhry contended that their focus on raising VAT was misguided, as it adversely affects lower-income individuals while serving as a means to address the government’s revenue needs amidst significant debt.
He noted that the recent hike in VAT diminished the purchasing power for many residents and stifled business activities. Chaudhry emphasized that the government did not provide adequate support for low-income workers in response to the VAT increase, as social welfare payouts only saw a minor increase of $15 to $20 monthly, insufficient to alleviate the financial burden on families.
Despite the challenging economic landscape, this discussion highlights an opportunity for the government to reconsider its fiscal strategies, prioritize social welfare, and engage with communities to develop more sustainable economic policies. A recognition of the detrimental impact of high taxes on the poor could pave the way for more equitable solutions that enhance the living standards of all Fijians.
In summary, the current VAT of 15 percent is under scrutiny, with calls for a decrease to ensure better economic conditions for citizens, particularly those from low-income backgrounds.
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