Government proposes revamping taxes and resort rent

The government plans to revamp taxes and rent from tourist resorts to revitalise the industry, Tourism Minister Dr Ahmed Sawad has said

Speaking to Minivan News today, Sawad said the current fixed costs of bed tax and lease rents served as a disincentive to investors.

Under the government’s proposed scheme, tourists will pay an ad valorum tax instead of a fixed bed tax. This means tourists will pay a percentage of the room rate rather than the fixed rate of US$8 per bed.

Last month, Eugene Radilesku, a consultant from the International Monetary Fund, said the government needed to capitalise on revenue from the tourism industry. For a hotel room that ranges from US$200 to US$500 per night, he said, the government only earned about US$8 in revenue.

Sawad said the lease rent for islands will also be changed from a fixed rate to one that is varies with the area of land.

All resorts will be subject to the changes, said Sawad. “We have very high lease rents and this creates a very high room rent, which is a vicious cycle. This will also encourage investors to continue development of resorts under construction.”

There are currently 58 resorts under development.

The new structure would also lower investment and enable resorts to make profits sooner, resulting in more mid-range resorts, said Sawad.

The government planned to submit a bill on ad valorem tax to the next session of parliament, he said, along with legislation to replace lease rents and extend the lease period from 35 to 50 years and beyond.

Dr Abdullah Mausoom, opposition Dhivehi Rayyithunge Party (DRP) MP for Kelaa, said the party’s views will be made known at the parliament floor when the bill is debated.

“One thing I have learned is that there is not enough consultation with stakeholders,” he said. “It’s very important that stakeholders in the tourism industry, who will be the most impacted by this, are consulted.”

He added DRP will be meeting with the Maldives Association of Tourism Industry (MATI) to discuss the matter.

Mohamed “Sim” Ibrahim, secretary general of MATI, told Minivan News today that the government gave a draft of the ad valorem tax legislation to the association today.

“There are several proposals the government has put on the table,” he said. “We have to see which of these is best for the country.”

The government needed to consider the impact on the industry, he added, and the introduction of taxes should be gradual.

“We can’t talk about quick solutions and knee-jerk reactions,” he said.

Sim said he did not think ad valorem taxes would lower the cost of investment. “I think it will be higher. It is much easier now because you know exactly what you’re paying and how you’re paying.”

But, he added, the government was consulting with MATI and other stakeholders in the industry.

“There is a process of exchange of opinions and ideas,” he said.


Religious TV channel at centre of dispute

The Adhaalath party has accused the Dhivehi Rayyithunge Party (DRP) of opposing the Islamic ministry’s plans to establish a religious TV channel using Zakat funds for political reasons.

A strongly-worded press release issued on Sunday states that the Adhaalath Party welcomes religious scholars from political parties criticising policies to hold the government accountable.

“But the Adhaalath party will speak out against anyone who seeks to use religion as a weapon to conceal personal motives,” it reads.

It adds that the DRP press release was intended to deceive people and undermine Maldivians’ faith in Islam.

A press release by the DRP last week stated that, according to the Qur’an, the Zakat fund can only be spent on eight categories of people, including the destitute, the poor and needy, those who collect alms, those in debt, wayfarers, converts, to liberate slaves and to promote Allah’s cause.

While the DRP statement interpreted the last category as funds for supporting holy wars or jihad, the Islamic ministry has said it extends to the propagation of Islam.

Establishing a television channel, building mosques, paving roads or arranging funerals for the poor from Zakat funds was prohibited in Islam, it continued, calling on the government to halt its plans to use the funds to build prayer rooms in schools and set up a television channel.

Last month, Islamic Affairs Minister Dr Abdul Majeed Abdul Bari said promoting the cause of Allah or Fi Sabeelillah did not only refer to jihad.

Bari said Rf2 million (US$156,000) was spent to establish an Islamic TV channel from the Zakat fund under the principle of Fi Sabeelillah.

“We did not say we are spending the Zakat fund allocated for poor and needy,” he said. “We decided to spend funds allocated for Fi Sabeelillah. We made the decision based on Fatwas issued by Islamic scholars.”

The Adhaalath Party press release refers to the Fiqh Sunnah of Sheikh Sayyid Sabiq, which states that Zakat funds can be used to pave roads, provide food and water and medical treatment for pilgrims.

Quoting the Fiqh Sunnah, it adds that the funds could be used to build military hospitals and finance social projects.

Further, Fi Sabeelillah includes training religious scholars to preach Islam and find converts in the manner of Christian missionaries as well as build religious learning centres.

The al-Azhar University in Egypt spends Zakat funds on pocket money for its students, the press release continues, adding that the DRP leader and his colleagues would have received this money when they were studying in Egypt.

“Therefore, if they are saying that Islam does not allow using these funds for a noble purpose, they are talking about some other religion,” it reads.

In the past, Zakat and welfare funds were misappropriated to spend on relatives and associates of former President Maumoon Abdul Gayoom, the Adhaalath party press release alleges.

It goes on to urge members of DRP to repent and “confess to their crimes before the people”.