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.