Author: Ahmed Naish

Parliament accepts bill on revising import duties

Parliament today accepted legislation on revising import duties as part of revenue raising measures proposed with the 2014 state budget.

The amendments (Dhivehi) submitted to the Import-Export Act by MP Mohamed Rafeeq Hassan on behalf of the current administration was accepted with 40 votes in favour and 20 against. The amendment bill has been sent to a committee of the full house for further review.

The bill proposes raising custom duties on a number of items from the current zero rate to five, 10, and 15 percent or higher. The items include diesel, sugar, sweets, cotton, rope, carpets, textiles, fur, man-made filaments, ready-made garments, and steel.

In addition, the import duty for vehicle seat covers would be raised from 30 to 50 percent.

If passed into law, import duties for polythene bags and items that contain hydrochlorofluorocarbons (HCFCs) would be hiked to 400 percent and 200 percent respectively.

Conversely, custom duties for organic and chemical fertilisers as well as pesticides would be reduced to zero percent.

Presenting the draft legislation, the MP for Fuvahmulah North said that the main purpose of the amendments was to increase tariffs on machinery and equipment that uses HCFC gas, and to reduce tariffs on machinery and equipment that uses ozone-friendly gases.

“Similarly, import duties for some goods will be reduced to encourage poultry and environment-friendly farming,” he said.

The import duty hikes were proposed in light of the persisting dollar shortage and rising commodity prices in the world market, he added.

In the ensuing preliminary debate today, Maldivian Democratic Party (MDP) MP Abdul Ghafoor Moosa called the proposed hikes “unacceptable”.

“Taking additional taxes from the public not too long after we introduced taxes will impose a burden on citizens,” Ghafoor said.

He contended that passing the income tax bill should be a higher priority for the Majlis as the tax would only be paid by those earning above MVR30,000 (US$1,946) a month.

Import duties were last revised in November 2011 – concurrently with the introduction of the Goods and Service Tax (GST) – by the MDP government as part of its economic reform package.

Custom duties were eliminated at the time for construction material, foodstuffs, agricultural equipment, medical devices, and passenger vessels and duties were reduced for items such as furniture and kitchen utensils.

Meanwhile, a parliamentary subcommittee tasked with reviewing government-sponsored legislation – intended to raise the Tourism GST, reintroduce the discontinued US$8 bed tax, and mandate the payment of resort lease extensions as a lump sum – has today completed the review process and submitted its report to the full Majlis committee.

The report will be debated at tomorrow’s sitting of parliament, after which the amendments to the GST Act and Tourism Act would likely be put to a vote.

Other revenue raising measures proposed by the government include raising airport departure charge for foreign passengers from US$18 to US$25, leasing 12 islands for resort development, and introducing GST for telecommunication services.

In December, parliament passed a record MVR17.5 billion (US$1.16 billion) budget for 2014, prompting President Abdulla Yameen to call on the legislature to approve the revenue raising measures to enable the government to finance development projects.

The current extraordinary sittings of parliament during the ongoing recess are being held at the request of government-aligned MPs, who contended that the Majlis’s failure to approve the revenue raising measures was hampering the implementation of the budget.

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Crime statistics reveal 46 percent spike in theft

Cases of theft reported to police last month increased by 46 percent compared to January 2013, according to crime statistics from the Maldives Police Service (MPS).

A total of 623 cases of theft were reported to police in January – an average of 20 cases a day – while 427 cases were reported in the same period last year.

Some 51 cases of theft and four cases of robbery have been reported so far in February.

Cases of robbery also rose from 54 in January 2013 to 88 cases last month.

Reported instances of theft had increased dramatically in 2012 compared to the previous year. While 4,734 cases of theft were reported in 2011, the number rose to 6,572 in 2012 – a 38 percent annual increase.

The figure climbed to 6,681 in 2013.

Robbery and theft currently account for roughly 50 percent of crimes reported to police.

Next to theft, the second highest number of cases reported in January 2014 involved drugs.

The number of drug cases filed last month reached 461, which represents a 56 percent hike compared to January 2013, during which police began investigating 295 cases.

The total number of crimes reported to police meanwhile increased by 20 percent compared with January of last year. While 1,742 cases were reported this year, the figure was 1,436 in January 2013.

Apart from theft, robbery, and drugs, other crimes reported in January this year included 100 cases of assault, 40 cases of sexual offences, 21 cases of domestic violence, six cases of counterfeit and forgery, 49 cases of vandalism, 17 cases of bounced cheques, 44 cases of embezzlement, and 150 lost items reported.

Meanwhile, at 189 cases, traffic accidents declined by eight percent last month compared to the same period in 2013.

Falling thieves

In November 2013, two men died after falling from buildings in the capital Malé during attempted robberies.

On November 15, a 29-year-old died of head injuries sustained in a fall from the fifth floor of the Galolhu Muthi residence.

One day later, a 31-year-old fell from the fourth floor of Henveiru Alikurige while attempting to jump on to the roof of a neighbouring house.

His foot reportedly got caught on an outdoor air-conditioning unit, which came loose and fell on his head.

Both thieves fell to their death while attempting to escape after being caught by the residents.

On January 7, a 27-year-old man fell from the fifth floor of Maafanu Mundhooge after a break-in. He survived the fall with minor injuries after landing on a pile of sand.

Three days later, a 32-year-old woman fell from the fourth floor of Manchangoalhi Light Corner during an alleged robbery attempt.

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Adhaalath Party to field parliamentary candidates in constituencies reserved for JP

The religious conservative Adhaalath Party has decided to field parliamentary candidates in 28 constituencies reserved by the governing coalition for the Jumhooree Party (JP), following a breakdown in talks between the parties.

In a press statement today, Adhaalath accused the JP of offering seats with the intention of “exploiting the trust and support of the public for Adhaalath to win as many seats as possible in the election for the Jumhooree Party.”

“The party does not believe now that [fielding candidates for] the 28 seats the Jumhooree Party will be contesting through the Progressive Coalition falls outside the party’s ethical responsibility,” the statement read.

Adhaalath assured its members that it would compete “to the best of our competence and ability” in constituencies the party believes it could win.

An Adhaalath Party council member told Minivan News last week that the party’s members have expressed interest in contesting for 32 constituencies.

He added that Adhaalath’s candidates may be the most qualified, with almost all having educational qualifications at a postgraduate level.

Coalition agreement

The ruling coalition – made up of the Progressive Party of Maldives (PPM), the JP and the Maldives Development Alliance (MDA), led by resort tycoon Ahmed ‘Sun Travel’ Shiyam – meanwhile reached an agreement last week to allocate parliamentary constituencies among the coalition partners.

Of the 85 electoral constituencies, the PPM will contest 49, the JP will contest 28, and the MDA will contest eight seats.

Following its exclusion from the coalition’s parliamentary election plans, PPM Deputy Leader Abdul Raheem Abdulla told the press that the Adhaalath Party was not “an official partner of the Progressive Coalition.”

“So the parties’ idea is to give them what we can from the seats which have been allocated to us,” Raheem said.

The Adhaalath Party began negotiations with coalition parties last week and requested the JP to assign five constituencies for its candidates.

The talks however ended unsuccessfully after the JP refused to cede the Vaikaradhoo and Makunudhoo constituencies in Haa Dhaalu atoll – two seats the Adhaalath Party believed its candidates had the best chance of winning.

“Instead, the [JP] proposed constituencies where the Adhaalath Party’s support is weakest,” today’s press release stated.

The party noted that it had decided to contest the parliamentary elections with the Progressive Coalition to prevent the opposition Maldivian Democratic Party from securing a parliamentary majority.

The Adhaalath Party was prepared to compromise and accept a few constituencies to campaign jointly with the governing coalition, the statement added.

However, if an understanding could not be reached, the party’s intention was to independently contest as many seats as possible, the party stated.

“Despite not reaching an agreement with the Progressive Party of Maldives in the discussions held on this issue so far, if the [PPM] cedes the few constituencies that we have requested, the Adhaalath Party will not compete in the other constituencies that the [PPM] will be contesting for,” the press release concluded.

No deal

In last year’s presidential election, the Adhaalath Party initially endorsed former President Dr Mohamed Waheed before eventually backing JP candidate Gasim Ibrahim, who finished third in the first round of the contentious polls.

In the second round, the party backed PPM candidate Abdulla Yameen without a formal coalition agreement.

Following the unsuccessful talks last week, JP Leader Gasim Ibrahim told the press that Adhaalath Party President Sheikh Imran Abdulla had refused the JP’s offer of four seats, including three of five constituencies requested by the party.

“[Imran said] ‘no, no, we don’t want those constituencies, we cannot give up certain constituencies.’ So I said thank you very much. What can I do when they did not accept?” Gasim said last Thursday.

The business magnate noted that the JP had “no commitments” to the Adhaalath as the coalition agreement formed ahead of the presidential election no longer existed.

On the same day, Imran tweeted that the party would “not find it easy to make a deal” that did not involve allocating the Makunudhoo, Vaikaradhoo, Komandoo, Inguraidhoo, and Fares-Maathoda constituencies to Adhaalath candidates.

“Adhaalath could only contest the Majlis [election] with the coalition if the coalition concedes areas where Adhaalath has support,” Imran tweeted today.

Meanwhile, Islamic Minister Dr Mohamed Shaheem Ali Saeed, spokesperson of the Adhaalath Party, took to Facebook yesterday to condemn remarks in the media by senior JP members that he contended “undermined Adhaalath Party’s dignity.”

“Adhaalath does not have to ask the JP to contest for the Majlis,” he wrote.

An unnamed senior JP official told newspaper Haveeru on Friday that the Adhaalath Party had forfeited the opportunity to contest the parliamentary election on coalition tickets.

“Despite not having an official agreement with Adhaalath Party, our leader decided to give seats to the party because he loves Adhaalath. But they wanted too many seats,” the senior member was quoted as saying.

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Second round of voting in council elections scheduled for February 15

A second round of voting in the local council elections will take place in four islands on February 15, the Elections Commission (EC) has announced.

Speaking at a press conference held yesterday to announce official results of the January 18 polls, EC President Fuwad Thowfeek said a second round was needed in four island council races where candidates in fifth place were tied with the same number of votes.

Run-of elections will take place in Haa Alif Muraidhoo, Baa Fehendhoo, Raa Maakurath and Gaaf Alif Kodey.

Thowfeek also revealed that the EC has annulled the results of the Noonu Miladhoo island council election after it emerged that disappearing ink might have been used.

Following an investigation by the National Complaints Bureau, the EC decided that the issue could have affected the outcome of the vote, Thowfeek said.

In addition to Miladhoo, voting for the Gaaf Alif Villigili constituency atoll council seats has also been scheduled for February 15.

The Villigili poll was delayed by the EC to afford a candidate adequate time to campaign after his disqualification by the commission was overturned by the Supreme Court.

The candidate in question had however withdrawn his candidacy following the EC’s decision to delay the poll.

On the second round of voting, EC member Ali Mohamed Manik told the press that ballot boxes will be placed in the islands and Male’.

Manik added that the commission had not made a decision concerning voters in the constituencies registered to vote elsewhere in the country.

However, the EC cannot allow re-registration for the second round, Manik said.

Victory for MDP amidst low turnout

EC President Thowfeek also revealed that the turnout on January 18 was 64.5 percent, down from the 70 percent turnout in the first local council elections that took place in February 2011.

Of 240,220 eligible voters, 154,942 voters cast their ballots, Thowfeek noted.

While turnout in some islands exceeded 80 percent, participation in some constituencies of the capital was as low as 30 percent.

A total of 2,463 candidates contested in the January 18 polls for 1,100 seats – 951 island council seats, 132 atoll council seats, and 17 city council seats.

Thowfeek noted that 72 female councillors were elected in the second local council elections, which accounted for six percent of the winning candidates.

According to the official results, the opposition Maldivian Democratic Party (MDP) won the most number of seats.

The main opposition party fielded 901 candidates and won 458 seats, including eight out of 11 seats in the Male’ City Council and all six seats of the Addu City Council. The two cities together account for 40 percent of the voting population.

The MDP also performed well in other population hubs such as Kulhudhufushi in the north and Fuvahmulah in the south.

The ruling ‘Progressive Coalition’ – composed of the Progressive Party of Maldives (PPM), Jumhooree Party (JP) and the Maldives Development Alliance (MDA) – fielded 934 candidates and won 456 seats.

The PPM took 277 seats, followed by the JP with 123 seats and the MDA with 56 seats.

Of the 543 independent candidates, 133 were elected. The Adhaalath Party meanwhile fielded 83 candidates and secured 45 seats.

The religious conservative party campaigned independently of the government coalition as it was not an official coalition partner with a formal agreement.

The Dhivehi Rayyithunge Party meanwhile fielded two candidates and won one council seat.

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LGA recommends making councillors part-time

The Local Government Authority (LGA) has recommended making councillors part-time with the exception of council presidents and vice presidents.

Speaking at a press conference yesterday, Defence Minister Colonel (Retired) Mohamed Nazim – who chairs the institution tasked with monitoring councils and coordinating with the government – said the LGA has proposed amending the Decentralisation Act to pay part-time councillors an allowance for attending council meetings.

“For example, a teacher or a headmaster level person or someone with higher educational qualifications, they will have the opportunity to contest [council elections]; or for example if it’s a skilled person, a boat builder, they will only have to come for meetings and they’re done after giving their advice and opinion,” Nazim explained.

“The president and vice president will operate the council. Instead, now they have to leave their profession – the teacher, headmaster or boat builder has to give up his job.”

As a consequence, Nazim contended, the councillors’ time was not put to productive use.

“The benefit of [the changes] is that the councillor has to work a very short amount of time and be free to work productively for the island’s development,” he added.

Wage bill

The president of island councils currently receive a monthly salary and allowance of MVR15,000 (US$973) while council members receive MVR11,000 (US$713). The mayor of Malé is paid MVR45,000 (US$2,918) a month.

The president and vice president of councils are elected from among the members by secret ballot.

A total of MVR717 million (US$46 million) was allocated in the 2011 national budget to pay salaries and allowances for local councils, which accounted for 17 percent of the annual wage bill.

Under article 25 of the Decentralisation Act, a five-member council is elected in islands with a population of less than 3,000, a seven-member council for islands with a population between 3,000 and 10,000, and a nine-member council for islands with a population of more than 10,000.

City councils comprise of “an elected member from every electoral constituency of the city” and atoll councils comprises of “elected members from the electoral constituencies within the administrative division.”

The current model of more than 1,000 elected councillors approved in 2010 by the then-opposition majority parliament was branded “economic sabotage” by the Maldivian Democratic Party (MDP) government, which had proposed limiting the number of councillors to “no more than 220.”

The new layer of government introduced with the first local council elections in February 2011 cost the state US$12 million a year with a wage bill of US$220,000 a month.

Finance Minister Abdulla Jihad told parliament’s Budget Review Committee last year that President Abdulla Yameen favoured revising the local government framework to reduce the number of island and atoll councillors.

In November 2013, the incoming administration proposed merging island and atoll councils, with the latter to be composed of a representative from each island of the atoll.

President’s Office Spokesperson Ibrahim Muaz said at the time that “the president’s thinking is not to cut down on the number of councillors. But to elect councilors based on the population of the islands. This is a move to curb state expenditure.”

However, parliament did not move to amend the Decentralisation Act ahead of the local council elections on January 18, which saw 1,100 councillors elected for  three-year terms.

Three-year terms

Nazim meanwhile told the press yesterday that the LGA’s recommendations have been shared with the government and the legislature.

While the proposals were intended to reduce the state’s recurrent expenditure – which accounts for over 70 percent of the budget – Nazim said the LGA does not support changing the council’s term from three to five years.

Contending that the legal responsibility of local councils was implementing the government’s policies, Nazim said voters should have the opportunity to change their elected representatives during an ongoing five-year presidential term.

“Citizens get an opportunity to see what kind of results the council produced and the extent to which they upheld the government’s policies,” he said.

Nazim said that LGA Deputy Chair Ahmed Faisal’s public remarks concerning combining the local council and parliamentary elections represented his personal opinion.

The defence minister noted that the Elections Commission has yet to announce official results of the local council elections – held eleven days ago – and that conducting the polls simultaneously would create present difficulties for the commission.

In December, the World Bank warned in a report that the Maldivian economy was at risk due to excessive government spending, with an already excessive wage bill ballooned by 55 percent in 2013.

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Auditor General questions legitimacy of telco license fees

The Communication Authority of Maldives (CAM) did not examine annual financial statements of telecommunication companies before collecting license fees, the audit report of the former Ministry of Civil Aviation and Communication for 2009 has revealed.

The audit report (Dhivehi) made public this week noted that CAM was authorised under its agreement with telcos to check and review financial statements of the companies at any time.

However, there was no documentation showing that financial statements were scrutinised by CAM in order to calculate the license fees, the audit found.

“Therefore, we note that it cannot be verified whether the amount of money paid by telecommunication companies to the state as license fees was in truth the full amount owed by the parties,” the report stated.

Based on the findings, Auditor General Niyaz Ibrahim recommended that CAM check audited financial statements of the companies at the end of the financial year to ensure that the license fees were paid in full.

The Ministry of Civil Aviation and Communication was later renamed Ministry of Transport and Communication. In addition to CAM, the Department of Civil Aviation and the National Centre for Information Technology (NCIT) also operated under the ministry.

Among three other cases flagged in the audit report was the absence of overtime work sheets for employees at the NCIT.

While MVR106,702 (US$6,920) was spent in 2009 for overtime pay with written authorisation from senior officials, “we note that due to the lack of records at the office for employees’ overtime work (overtime work sheet) the actual overtime work and time spent could not be verified,” the report stated.

As a result, the report added, auditors could not guarantee the legitimacy of the overtime pay in 2009.

The auditor general recommended ensuring proper maintenance of records and taking action against responsible officials in line with public finance regulations.

The audit also discovered that the ministry attempted to pay a contractor MVR68,000 (US$4,410) to set up a biometric attendance system before the installation work was complete.

While the agreement was signed on December 31, 2009, to complete installation within 30 days, the audit report noted that the contractor billed the ministry on the same day, which then submitted an expense voucher to the Ministry of Finance and Treasury.

“However, we note that there were no documents at the ministry to guarantee that the work was complete before the contractor billed the ministry. Therefore, we believe that the ministry attempted to pay the contractor before the work was completed,” the report stated.

Moreover, there were no records at the ministry of estimates submitted by three interested parties, the report noted, and the evaluation committee chose the contractor with the lowest point score.

While minutes of the evaluation committee’s meetings showed that two proposals were disregarded due to lack of technical specifications, auditors found that the required technical specifications were included in one of the disqualified bids.

The auditor general recommended taking action against the official responsible for submitting the expense voucher to the Finance Ministry without confirming completion of the outsourced task.

Additionally, the audit office recommended an investigation by the Anti-Corruption Commission into the awarding of the contract by the evaluation committee.

In the third case highlighted in the report, auditors found that the ministry was not reimbursed the MVR23,927 (US$1,552) spent on a plane ticket for the minister to attend a ministerial  meeting of the Asia Pacific Telecommunity (APT) in Bali, Indonesia.

As travel and other expenses for the trip were to be covered by the APT, the auditor general recommended recovering the money.

Aside from the flagged cases of ostensible violations of public finance law, the audit report concluded that financial transactions of the ministry and the institutions operating under its remit was in compliance with the Public Finance Act and regulations under the law.

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Finance Ministry imposes cost cutting measures

The Ministry of Finance and Treasury last week instructed all government offices to enforce cost cutting measures in a bid to reduce recurrent expenditures and manage government cash flow.

A circular issued by Finance Minister Abdulla Jihad instructed offices to limit overtime pay to no more than five percent of the office’s annual budget.

Other cost cutting measures included targeting subsidies, limiting allowances to 35 percent of an employees’ salary, and not covering phone expenses of senior officials – with the exception of cabinet ministers.

Moreover, offices were instructed not to hire speedboats for official travel in areas with a ferry service.

Finance Minister Jihad told local media this week that the government has also decided to reduce the MVR80 million (US$5 million) allocated in this year’s budget for civil servant’s salary bonus to MVR40 million (US$2.5 million).

Jihad said recurrent expenditure was too high for the government to “make ends meet.”

In December, parliament passed a record MVR17.5 billion (US$1.16 billion) budget for 2014, prompting President Abdulla Yameen to call upon the legislature to approve revenue raising measures proposed by the government.

On Sunday, parliament accepted with a 38-vote majority three bills submitted by the government to raise additional revenue.

The bills included an amendment to raise the Tourism Goods and Services Tax (T-GST) from eight to 12 percent as well as two amendments to the Tourism Act in order to reintroduce the discontinued flat US$8 bed tax and to require resort lease extension payments to be paid as a lump sum.

An 11-member subcommittee chaired by business tycoon Gasim Ibrahim – leader of the government-aligned Jumhooree Party – is currently in the process of reviewing the government-sponsored legislation.

The committee met representatives of the Maldives Association of Travel Agencies and Tour Operators (MATATO) and the Maldives Association of Tourism Industry (MATI) today to discuss the impact of the tax hikes on the sector.

Following the Majlis’s failure to extend the tourism bed tax before the end of last year, Jihad told local media that the resulting shortfall in revenue would be MVR100 million a month.

In an interview with Minivan News last week, Tourism Minister Ahmed Adeeb criticised parliament for going into recess without passing bills designed to generate income.

“This causes the budget to expand, but there’s no way for the government to earn enough to implement it. The T-GST matters even more to the state income. The state keeps expanding, the allowances and salaries keep increasing, but the income for all of this still depends on the 25,000 tourist beds. Unless we expand this, how can we increase what we earn? We can’t keep expanding the state, and then squeezing the existing tourism sector without expanding it,” Adeeb warned.

Recurrent expenditure

Shortly after assuming the presidency, Yameen announced that he would only draw half the presidential salary of MVR100,000 (US$6,500), and would reduce the number of political appointees at the President’s Office.

Submitting the 2014 annual budget to parliament last year, Jihad noted that recurrent expenditure (MVR12 billion) accounts for 73 percent of the total budget, with almost half spent on salaries and allowances for state employees in addition to administrative costs, interest payments and subsidies.

Jihad advised implementing a raft of austerity measures, contending that the “expensive” public management model adopted in the Maldives was inappropriate for a small island state.

Almost 50 percent of government income was spent on employees, Jihad observed, advising revision of the state pension system and reduction of the numbers of island and atoll councillors as well as members of independent institutions and boards of government-owned companies.

In its professional opinion on the 2013 budget, the Auditor General’s Office stated that a policy of population consolidation together with effective measures to reduce the public sector wage bill was necessary to rein in the continuing fiscal deficits.

When announcing his resignation at a press conference earlier this month, former Maldives Monetary Authority (MMA) Governor Dr Fazeel Najeeb contended that the structure of government was outsized for the Maldives and warned against printing money to cover the “far too hefty expenses of many state institutions.”

In November last year, Najeeb told parliament’s finance committee that the public bank account was overdrawn by MVR1.5 billion (US$97 million) as a result of having to finance government expenditure.

“When we have to accommodate every request by the government we are forced to act completely against the MMA law,” he said, referring to printing money.

Jihad explained to MPs on the committee that the government was forced to approach the MMA because foreign banks were refusing to buy or rollover treasury bills.

While MVR500 million (US$32 million) a month was needed to pay salaries and allowances for state employees, government income in some months was just MVR300 million (US$19 million), Jihad noted, leaving no option but turning to the central bank.

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EC announces preliminary results of local council elections

The Elections Commission (EC) yesterday completed announcing preliminary results of the local council elections that took place on Saturday, January 18.

EC President Fuwad Thowfeek told the press that a second round of voting would be necessary in some races where the last placed candidates received the same number of votes.

“For example, for a five-member council, if the [candidates] in fifth place and sixth place are tied, in such cases we have to go to a second round,” Thowfeek explained.

He added that the EC would announce a date for the second round, though Thowfeek did not reveal the constituencies where a second round would be needed.

Official results are meanwhile expected by Friday. Election laws stipulate that official results must be announced within 14 days of the polls.

A total of 2,463 candidates contested in the January 18 elections for 1,100 seats – 951 island council seats, 132 atoll council seats, and 17 city council seats – in the country’s second local government elections under the landmark Decentralisation Act of 2010.

Minivan News’s analysis of the provisional results – subject to change – shows that the opposition Maldivian Democratic Party (MDP) won 457 seats (41.5 percent) while the ruling Progressive Party of Maldives (PPM) won 281 seats (25.5 percent).

The PPM’s coalition partners, the Jumhooree Party (JP) and the Maldives Development Alliance, took 125 seats (11.4 percent) and 59 seats (5.4 percent) respectively.

The Adhaalath Party secured 45 seats (4.1 percent) – including a majority in three councils – while the Dhivehi Rayyithunge Party (DRP) won one seat (0.1 percent) and independent candidates won 132 seats (12 percent).

The Adhaalath Party campaigned independently of the government coalition as the religious conservative party was not an official coalition partner. The party decided to back PPM candidate Abdulla Yameen in the second round of the presidential election last year without a formal coalition agreement.

Close race, PPM satisfied

The MDP’s 457 seat haul meanwhile includes 55 atoll council seats, 14 city council seats, and 388 island council seats.

The main opposition party retained a majority of the Malé and Addu City councils. The two cities account for 40 percent of the voting population.

The party also gained majority control of 79 councils (37.6 percent).

Parties representing the government coalition took a combined total of 465 seats, including 71 atoll council seats, three city council seats, and 391 island council seats.

The government coalition won a majority in 57 councils.

At a press conference hours after polls closed on January 18, former President Mohamed Nasheed said that the results portended a victory for the MDP in the upcoming parliamentary elections.

Nasheed also threatened to impeach President Abdulla Yameen should the opposition party secure a majority of parliamentary seats.

“The Maldivian citizens still want an MDP government, and for Maldives to be ruled according to MDP’s philosophy. I would like to tell the Maldivian public, do not be disheartened. God willing, without much delay, we will take over the government,” he said.

Earlier in the day, Nasheed told reporters that the MDP suspected electoral fraud using fake national identity cards in the presidential election.

The former president’s remarks were condemned the following day by the PPM, with Deputy Leader Abdul Raheem Abdulla expressing confidence of the government coalition winning “a clear majority” of seats in the local council elections.

Raheem accused the MDP’s presidential candidate of attempting to incite unrest and turmoil.

Referring to Nasheed’s remarks conceding the presidential election on November 16, Abdul Raheem said a responsible opposition party would not seek to change the government.

Nasheed was narrowly defeated by PPM candidate Yameen in November’s controversial presidential election, winning 48.61 percent of the vote (105,181) to Yameen’s 51.39 percent (111,203) – a difference of just 6,022 votes.

President Yameen meanwhile told reporters last week that PPM members who contested as independents cost the government coalition a number of seats.

Yameen claimed that more than 85 percent of independent candidates were PPM members.

PPM members decided to contest as independent candidates in constituencies reserved for the coalition partner JP, Yameen explained, despite instructions from the party.

President Yameen noted that the three seats won by PPM candidates in the capital was an improvement on the February 2011 results, in which the then-opposition took two seats to the MDP’s nine.

Yameen further contended that the results of the council elections showed “huge support for our coalition”.

“So I am satisfied. [But] we could have put in a better effort,” he said.

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Government’s revenue raising bills sent to committee

Three bills submitted by the government to raise additional revenue have been sent to a committee of the full parliament for further review.

Today’s extraordinary sitting of the People’s Majlis was held during the ongoing recess upon request of 27 government-aligned MPs. The government contends that failure to pass the revenue bills during the last session of 2013 was hampering implementation of the budget.

The three bills accepted today included an amendment to raise the Tourism Goods and Services Tax (T-GST) from eight to 12 percent as well as two amendments to the Tourism Act in order to reintroduce the discontinued flat US$8 bed tax and to require resort lease extension payments to be paid as a lump sum.

While two of the bills were accepted with 38 votes in favour and 26 votes against, the third was accepted with 37 votes in favour and 26 votes against.

The full Majlis committee formed an 11-member subcommittee to review the bills, including five opposition MPs and six pro-government MPs. The extraordinary sittings have been scheduled to resume on February 3.

Among other revenue raising measures proposed by the government are revising import duties, raising airport departure charge for foreign passengers from US$18 to US$25, leasing 12 islands for resort development, and introducing GST for telecommunication services.

In December, parliament passed a record MVR17.5 billion (US$1.16 billion) budget for 2014, prompting President Abdulla Yameen to call on the legislature to approve the revenue raising measures to enable the government to finance development projects.

“Double taxation”

MPs of the opposition Maldivian Democratic Party (MDP) voted against all three pieces of government-sponsored legislation, expressing concern over potential adverse effects on the tourism industry.

While some government-aligned MPs echoed the concerns, most argued that increasing government revenue was essential for providing public services and financing government operations.

MP Ibrahim Mohamed Solih, parliamentary group leader of the MDP, has previously contended that raising T-GST while reintroducing the bed tax would amount to “double taxation.”

Following the Majlis’s failure to extend the tourism bed tax before the end of last year, Finance Minister Abdulla Jihad told local media that the resulting losses to state revenue would be MVR100 million a month.

In an interview with Minivan News last week, Tourism Minister Ahmed Adeeb said parliament had not considered the impact on the budget when it broke for recess without extending the bed tax.

“Normally, budget and government revenue earning bills are passed together. But here, the parliament goes into recess after passing the budget, leaving the income bills pending for after that. And even then, they often just fail,” he said.

“This causes the budget to expand, but there’s no way for the government to earn enough to implement it. The T-GST [Tourist Goods and Services Tax] matters even more to the state income. The state keeps expanding, the allowances and salaries keep increasing, but the income for all of this still depends on the 25,000 tourist beds. Unless we expand this, how can we increase what we earn? We can’t keep expanding the state, and then squeezing the existing tourism sector without expanding it.”

On January 6, Adeeb issued a circular to all tourist establishments informing the resorts that the government was seeking reintroduction of the bed tax.

Resort lease extensions

Under the amendments proposed to the Tourism Act, resort leases can be extended to 50 years with a lump sum payment of US$100,000 per year.

Resorts with approved lease extensions – currently paying for the extension in installments – would also have to make the full payment within three months of ratification.

Following the controversial transfer of presidential power in February 2012, the administration of President Dr Mohamed Waheed allowed extended resort leases to be paid in installments, rather than upfront at the end of the lease.

In April 2012, the Maldives Inland Revenue Authority (MIRA) revealed that the total revenue collected in March 2012 was 37.9 percent lower than the projected revenue “mainly due to the unrealised revenue from the Lease Extension Period.”

At the time of the Tourism Ministry’s announcement of the extension payment changes, the government had already received lump sum payments from 25 resorts equating to US$40 million and was expecting nearly US$135 million more from 90 resorts.

“The [administration of former President Mohamed Nasheed] had requested that those resorts extending to a 50 year lease pay in a lump sum,” former Tourism Minister Dr Mariyam Zulfa explained to Minivan News at the time.

“[But] while I was Tourism Minister, Gasim Ibrahim and Ahmed ‘Redwave’ Saleem kept pressuring me to let them pay on a yearly basis. They didn’t want to give any money to the government, and soon after the government changed they got what they wanted. [The installments] will only be payable at the end of the current lease periods – it is a huge loss to the treasury.”

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