Finance Minister Ibrahim Ameer has said the proposed tax hikes will bring in USD 63 million in GST and USD 137 million in (TGST).
In a statement to the Maldives Parliament, Minister Ameer outlined the advantages of implementing the tax increases and the difficulties the country would face without them. He stated that the government is willing to take any measures necessary to defend the nation from global economic downturns, citing the efforts done by the government to manage the COVID-19 pandemic.
In addition, Minister Ameer mentioned the changes in interest rates as a result of the shifts in the U.S. and European economies, which have diminished the number of options to obtain foreign financial aid. In addition, he stated that the Maldives’ continued development will result in an increase in expenditures and that the nation must find ways to enhance its own earnings. He said that it is also the International Monetary Fund’s (IMF) and the World Bank’s recommendations.
Furthermore, Minister Ameer stated that increasing the GST and TGST is the most significant step in increasing government revenue, as it will allow the government to control its recurring expenditures. He added that measures must be done to cut governmental expenditures. To achieve the suggested fiscal policy, he stated that the GST and TGST must be increased, noting that the IMF advised the Maldives boost its TGST from 12% to 18%, which is common for most nations. However, he stated that the administration intends to hike the TGST to 16%. According to him, the tax increases will enhance state revenues by USD 195 million.
